Exhibit 15-2
-In the case of negative externalities, a competitive market may not generate an efficient amount of production.

Name: Exhibit 15-2 -In the case of negative externalities, a competitive market may not generate an efficient amount of production.
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Question

Exhibit 15-2 
-In the case of negative externalities, a competitive market may not generate an efficient amount of production.

Quizplus · Accepted Answer

Negative externalities impose costs on third parties and are not taken into account by the producers in a competitive market. Therefore, the market may overproduce a good, leading to an inefficient outcome.

Exhibit 15-2 -In the Case of Negative Externalities, a Competitive Market May