When a negative production externality is present in a market:
A)private costs are less than social costs.
B)private costs are less than external costs.
C)social costs are less than external costs.
D)external costs are equal to social costs.

Question

Quizplus · Accepted Answer

When a negative production externality is present, the cost of producing goods or services (private costs) does not account for the external costs imposed on society (e.g., pollution), making the social costs (private costs plus external costs) higher than the private costs alone.

When a Negative Production Externality Is Present in a Market