Question

What would be a reason for a government not to intervene with a particular externality?

(A) Some citizens are not affected by the externality.
(B) The externality is well established and not a surprise to the market.
(C) The externality is not large enough to justify the costs of intervening.
(D) The externality does not affect those actually engaged in market activity.

Answer 1

Answer:(C) The externality is not large enough to justify the costs of intervening.

Explanation: These costs might include administrative expenses and a regulatory burden on producers.

Answer 2

(B) The externality is well established and not a surprise to the market.

Step-by-step explanation:

• The local governments do not intervene in any sort of externality in the market s the knowledge that its a well established and a large scale market that can have implications on the internal functioning of the organization and is usually affected by many factors like the demand and supply of the market.

• Various factors like political, economic, demographical, technological and social are in close association with these externalities prevail in the market.