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Answer to Question #214860 in Microeconomics for Vinay

Question #214860
How do inefficiency occur in the market due to externalities?
1
Expert's answer
2021-07-07T12:59:08-0400

An externality refer to cost or benefits caused by producer but not financially incurred or received. Externalities lead to market failure because a product or service's price equilibrium does not accurately reflect the true costs and benefits of that product or service.


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