Question

8. A market incentive plan: A. regulates the amount of a resource a person can consume through direct limits. B. requires that people choose to consume until the marginal costs exceed the marginal benefits. C. makes the price of a resource reflect not only the marginal private costs but also the marginal social costs of consuming that resource. D. makes the price of a resource reflect the marginal private costs of consuming that resource.

Answer 1

Option C: Makes the price of a resource reflect not only the marginal private costs but also the marginal social costs of consuming that resource.

Step-by-step explanation:

Market Failure is simply a scenario where the unseen (invisible) hand leads/influences in such a way that individual decisions do not lead to socially desirable outcomes. The sources of Market Failure are Externalities, Public Goods and Imperfect Information.

Market Incentive Plan is simply a plan thatrequires market participants to show,handle or certify that they have reduced total consumption even if it is not their own consumption and by a specified amount. It is a think cap and trade and a move or way to deal with externalities( the outcome of a decision on a third-party are not considered by the decision maker).