Consider a market where production of the good is creating a negative externality.In the market equilibrium,there is a deadweight loss because the

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The deadweight loss in the presence of a negative externality occurs because the internal cost of production (the cost borne by the producer) is less than the social cost (the total cost to society, including external costs not borne by the producer). This discrepancy leads to overproduction relative to the socially optimal level, causing a deadweight loss.

Consider a Market Where Production of the Good Is Creating