A market with a negative externality has total surplus that is _______ total surplus in a market without a negative externality.
A)lower due to deadweight loss than
B)equal to
C)higher due to deadweight loss than
D)equal to, but redistributed differently, than

Question

Quizplus · Accepted Answer

Negative externalities cause markets to operate inefficiently, leading to a deadweight loss. This inefficiency reduces the total surplus compared to a market without such externalities.

A Market with a Negative Externality Has Total Surplus That