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When a Market Is Characterized by an Externality, the Government

Question 280

Multiple Choice

When a market is characterized by an externality, the government


A) can correct the market failure only in the case of positive externalities.
B) can correct the market failure only in the case of negative externalities.
C) can correct the market failure in the case of both positive and negative externalities by inducing market participants to internalize the externality.
D) cannot correct for externalities due to the existence of patents.

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