When an externality is present in a market,and internalizing it increases the efficiency of the market,we can conclude it is a:
A)negative externality.
B)positive externality.
C)network externality.
D)It could be a negative or positive externality.

Question

Quizplus · Accepted Answer

Without knowing whether the externality is negative or positive, it is impossible to determine whether internalizing it would increase or decrease efficiency. Therefore, option D is the best choice.

When an Externality Is Present in a Market,and Internalizing It