Selected answer is incorrect. Question 8 1 pts In what sense do externalities ca

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Selected answer is incorrect.

Question 8 1 pts In what sense do externalities cause the "invisible hand" of the marketplace to fail? Markets fail to produce the maximum total benefit to society when positive or negative externalities are present. Externalities result in prices that are too high for many consumers to pay. Externalities lead to government intervention in markets, which exacerbates the problems associated with externalities Markets produce too little of a good when positive or negative externalities are present.

Explanation / Answer

a) Markets fail to produce the maximum total benefit to society when positive or negative externalities are present.

See in the absense of externalities,the invisible hands leads a market to maximize output of goods and services in that market. In markets, the invisible hands allocates resources efficiently when the buyers and sellers are only interested party. In presence of externalities,government intervention may improve the market outcomes.

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