Final answer:
The lack of universal standards in the industrial goods market results in inconsistent quality and safety standards, hinders international trade, increases production costs, and creates market entry barriers for small businesses. A common standard is suggested as a solution. Option a is the correct answer.
Step-by-step explanation:
The lack of universal standards in the industrial goods market has several significant impacts. Firstly, it leads to inconsistent product quality and safety standards, making it difficult for consumers to trust the quality and safety of products, and it may lead to health and safety hazards.
Secondly, it hinders international trade and collaboration because products that meet the standards in one country may not meet those in another, complicating the trade process and reducing market efficiency. Thirdly, the lack of common standards can increase production costs and inefficiencies, as manufacturers may need to alter their products to meet different standards for different markets, leading to increased manufacturing complexity and higher costs.
Lastly, it creates barriers to market entry for small businesses which may not have the resources to navigate and comply with a myriad of different standards across various markets. Creating a common standard, such as the 'first best' policy mentioned in the provided information, may help in addressing these issues at their root by simplifying international trade and improving market access.