If in market equilibrium the true marginal cost of producing a good exceeds the marginal cost incurred by the firm,
A) not enough of the product is being produced.
B) the price charged for the good is too high.
C) the good produces a positive externality.
D) the good produces a negative externality.
E) the government should produce the good.

Question

Quizplus · Accepted Answer

When the true marginal cost exceeds the firm's marginal cost, it indicates a negative externality, as the firm is not accounting for the external costs imposed on society.

If in Market Equilibrium the True Marginal Cost of Producing