1)Why does the market fail with products that have externalities? A) some of the
ID: 1252718 • Letter: 1
Question
1)Why does the market fail with products that have externalities?A) some of the costs or benefits spill over to a third party
B)nobody wants to buy these products
C)nobody wants to sell these products
D)the government takes over their production
2)Which of the following is NOT a way the government can increase the consumption of a good with a positive externality?
A)require it by law
B)subsidize the consumer
C)subsidize the producer
D)A,B & C are all legitimate ways of increasing consumption.
Explanation / Answer
1. A
2. D
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