Use the Following to Answer Question(s): Correcting for Market Failure

Multiple Choice

Use the following to answer question(s) : Correcting for Market Failure: External Cost

-(Exhibit: Correcting for Market Failure: External Cost) Assume that there is an external cost involved, as illustrated in the exhibit.Economists argue that in an unregulated private market _______ is produced and the supply curve (S₁) reflects ________ cost.

A) too little; private
B) too much; private
C) too much; external
D) too little; external and private