Private Markets Fail to Reach a Socially Optimal Equilibrium When

Multiple Choice

Private markets fail to reach a socially optimal equilibrium when external benefits are present because the:

A) social value exceeds the private value at the private market solution.
B) private cost exceeds the social benefit at the private market solution.
C) private benefit equals the social benefit at the private market solution.
D) None of the answers is correct. Private markets DO achieve a socially optimal equilibrium when external benefits are present.