O the economy can benefit from government intervention. O a person engages in an activity that influences the well-being of a bystander and yet neither pays nor receives payment for that effect. O markets are not able to reach equilibrium. Oa firm sells its product in a foreign market.
O the economy can benefit from government intervention. O a person engages in an activity that influences the well-being of a bystander and yet neither pays nor receives payment for that effect. O markets are not able to reach equilibrium. Oa firm sells its product in a foreign market.
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter5: Difficult Cases For The Market And The Role Of Government
Section: Chapter Questions
Problem 10CQ
Related questions
Question
Transcribed Image Text:An externality exists whenever
O the economy can benefit from government intervention.
a person engages in an activity that influences the well-being of a bystander and yet neither pays nor
receives payment for that effect.
O markets are not able to reach equilibrium.
O a firm sells its product in a foreign market.
Expert Solution
Step 1
The firm produces various goods and services and has a cost on the production on the goods and services. The externality would result in the external benefit or the cost imposed on the third party from the production of the goods and services by other individual.
The externality would be a market failure which would result in the market fails to achieve equilibrium would result in the failing to the market. The externality would result in the external intervention of the government to correct market failure.
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