Oscar owns a meat processing plant whose unpleasant odors waft across the city.Because the production of processed meat provides a negative externality to the community, at the market equilibrium quantity, the marginal social:

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At the market equilibrium quantity, the marginal social cost of processed meat exceeds the market price. This is because the production of processed meat generates negative externalities for the community in the form of unpleasant odors. As a result, the cost to society of producing processed meat is higher than the private cost to the producer. This is a classic case of market failure, where the market outcome is not efficient and the optimal level of production is lower than the market equilibrium level. In order to address this market failure, the government may impose regulations or taxes aimed at internalizing the external costs and bringing the market closer to the socially optimal level of production.

Oscar Owns a Meat Processing Plant Whose Unpleasant Odors Waft