Question

Market equilibrium for a manufactured good may not be efficient if select one:

a. property rights are not well defined.
b. there is likely to be a positive externality associated with production.
c. there is likely to be a negative externality associated with production.
d. all of the answers are reasons why the market equilibrium for a manufactured good may not be efficient.

Answer 1

Externalities can make market equilibrium inefficient for a manufactured good. Option d is the correct answer.

Step-by-step explanation:

In a market equilibrium for a manufactured good to be efficient, several conditions need to be met. One of the factors that can make market equilibrium inefficient is the presence of externalities, which are costs or benefits that are not reflected in the market price. Externalities can be positive or negative. For example, if there is a positive externality associated with production, the market equilibrium may not be efficient because the social benefits exceed the private benefits. On the other hand, if there is a negative externality associated with production, the market equilibrium may not be efficient because the social costs exceed the private costs.

In summary, the correct option is d. all of the answers are reasons why the market equilibrium for a manufactured good may not be efficient.