Which of the following is true if a negative externality is associated with the sale of gasoline

Question

Quizplus · Accepted Answer

A negative externality means that the production or consumption of a good or service imposes costs on third parties who are not involved in the transaction. In the case of gasoline, a negative externality could be air pollution, which can cause health problems for people who live near roads or highways. The marginal social cost of gasoline is the cost to society of producing and consuming one more gallon of gasoline, including the cost of the negative externality. The marginal private cost of gasoline is the cost to the individual consumer of buying one more gallon of gasoline. If a negative externality is associated with the sale of gasoline, then the marginal social cost of gasoline will exceed its marginal private cost.

Which of the Following Is True If a Negative Externality