When a competitively produced product has negative externalities in production,the industry will

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When a product has negative externalities in production, it means that the production of the good imposes additional costs on society that are not accounted for by the private costs of production. As a result, the marginal social cost (the cost to society) is higher than the marginal private cost (the cost to the producer). In a competitive market, producers make decisions based on their private costs and benefits, ignoring the external costs imposed on society. Therefore, they will produce more of the good than is socially optimal, leading to overproduction. This is because at the competitive equilibrium, the marginal social cost exceeds the marginal social benefit, but producers are not considering the social costs, only their private costs and benefits.

When a Competitively Produced Product Has Negative Externalities in Production,the