Exhibit 31-4

-Refer to Exhibit 31-4. If a negative externality exists,then the market ____________output by the amount ________________.

Question

Exhibit 31-4
 
-Refer to Exhibit 31-4. If a negative externality exists,then the market ____________output by the amount ________________.

Quizplus · Accepted Answer

A negative externality leads to overproduction because the market does not account for the external costs. The overproduction is quantified by the difference between the socially optimal output (Q₂) and the market output (Q₁), which is Q₁ - Q₂.

Exhibit 31-4 -Refer to Exhibit 31-4. If a Negative Externality Exists,then the Negative