Overproduction occurs in the presence of a negative externality because the external costs are paid by someone other than the producers and consumers.

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Overproduction leads to a negative externality, which is an external cost that is imposed on a third party who is not involved in the transaction. This means that the producers and consumers do not pay the full cost of their actions, and this can lead to overproduction. The third party may be affected by pollution, congestion, or other external costs that result from overproduction. Therefore, overproduction can occur in the presence of a negative externality when the external costs are paid by someone other than the producers and consumers.

Overproduction Occurs in the Presence of a Negative Externality Because