An economic agent ______ when he accounts for the full costs and benefits of his actions.

The answer is A because when an economic agent internalizes an externality, they take into consideration not only their own private costs and benefits but also the social costs and benefits associated with their actions. This concept is essential in economics, especially when discussing issues like public goods or negative externalities like pollution.

For example, if a factory produces goods but also emits pollution, the factory owner might only consider the costs of production in their decision-making. However, if they internalize the externality, they would factor in the additional costs imposed on society due to pollution, which may lead them to reduce production or invest in cleaner technologies. This behavior aligns the individual's decision-making with the overall welfare of society, leading to more efficient outcomes.

In contrast, ignoring the impacts of one’s actions would mean disregarding these externalities, which could lead to inefficient market outcomes. Maximizing short-term gains focuses on immediate benefits without considering broader implications or the future consequences of actions, and operating based on market norms may not always ensure that the full costs and benefits are considered. Therefore, internalizing an externality is a step towards achieving more optimal and socially beneficial economic decisions.