When the social costs exceed the private costs, economists state that there is

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When social costs exceed the private costs, it indicates the presence of a negative externality. Negative externality happens when the production or consumption of a good or service imposes external costs on others who are not compensated for those costs. In this case, the market equilibrium will lead to an overproduction of the good since private production costs do not include social costs, resulting in a market failure.

When the Social Costs Exceed the Private Costs, Economists State