The overselling of private goods results in social costs.

Question

Quizplus · Accepted Answer

When private goods are oversold, it can lead to negative externalities or social costs such as pollution, overuse of resources, and congestion. This is because the production and consumption of these goods can have unintended consequences on others outside of the transaction. For example, a factory that produces goods may pollute the environment and harm the health of nearby residents. When these social costs are not factored into the price of the private goods, it leads to an inefficient allocation of resources and a loss of welfare for society as a whole.

The Overselling of Private Goods Results in Social Costs