Markets Fail When Externalities Are Present

Multiple Choice

Markets fail when externalities are present

A) because all of the costs and benefits of producing a good are reflected in the market price.
B) because some of the costs and benefits of producing a good are not reflected in the market price.
C) only if they are negative; positive externalities are not market failures.
D) because profits are not maximized.
E) if the positive externalities are less than the negative externalities.