Econ MC

Externalities cause markets to
a. fail to allocate resources efficiently.
b. cause price to be different than the equilibrium price.
c. benefit producers at the expense of consumers.
d. cause markets to operate more equitably.

I think the answer is a)??

I agree

but b seems right too, because it will cause price to be different, won't it?

b) I don't believe is right. The market with the externality will have an equilibrium price. While this price will be different than the socially optimum price, the price will be in equilibrium. (Barring any changes in tastes, technology, etc, any fluxuations in prices will cause an imbalance between Q supplied and Q demanded -- eventually the price settle back to the equilibrium price)

  1. 👍 0
  2. 👎 0
  3. 👁 63
asked by Anonymous

Respond to this Question

First Name

Your Response

Similar Questions

  1. economics

    1) A monopolist is deciding how to allocate output between two markets that are separated geographically. Demands for the two markets are P1 = 15 –Q1 and P2 = 25 – 2Q2. The monopolist’s TC is C = 5 + 3(Q1+Q2). What are

    asked by BELETE on June 22, 2016
  2. Economics(help!!!)

    A monopolist is deciding how to allocate output between two markets that separated geographically. Demands for the two markets are P1=15-Q1 and P2=25-2Q2.The monopolist's TC is C=5+3(Q1+Q2).What are PRICE,OUTPUT,PROPISTS, MR if

    asked by James on June 12, 2017
  3. Economics

    A monopolist is deciding how to allocate output between two markets thata separated geographically. Demands for two market are P1=15-Q1 and P2=25-2Q2. The monopolist's TC is C=5+3(Q1+Q2).What are*price *output *profit *MR Ifa)the

    asked by Anonymous on June 19, 2017
  4. economics

    Part III: Calculate the Following Questions by Using the Necessary Steps (4 pts each) 1) A monopolist is deciding how to allocate output between two markets that are separated geographically. Demands for the two markets are P1 =

    asked by Belete on June 21, 2016
  5. investing 2-17

    Which of the following statements about organized security markets is correct? A. Organized security markets are examples of financial intermediaries. B. Organized security markets transfer resources from savers to borrowers. C.

    asked by Johnny on February 22, 2009
  6. Economics

    “Prices contribute to the efficient production and distribution of goods and services by embodying vast amounts of knowledge not available to any individual… prices lead to social outcomes that take account of procedures’

    asked by D on November 4, 2006
  7. Economics

    A monopolist is deciding how to allocate output between two market that are separated geography.demands for the two markets are p1=15-q1 and p2=25-2q2.the monopolist TC is c=5+3(q1+q2).what are price,output,profits,and mr if:a)the

    asked by Please Any One Help Me! on June 24, 2017
  8. social studies

    A socialist economy is characterized by: A. an extensive reliance on markets to allocate final goods and services. B. an extensive reliance on the profit motive to govern resource allocation decisions C. elimination of the problem

    asked by ciara on December 20, 2010
  9. finance 32

    32. the financial markets allocate capital to corporations by A. reflecting expectations of the market participants in the prices of the corporation's securities B. requiring higher returns from companies wih lower risk than their

    asked by Jason on July 24, 2008
  10. ecnomics

    4.During the energy crisis of the 1970s, and again in the last 5 years, Congress bemoaned the “price gouging” and “windfall” profits of the major oil companies. In the 1970s Congress imposed an “excess profits tax” on

    asked by Cynthia on November 5, 2014

More Similar Questions