When a negative consumption externality is present in a market, total surplus will be _______ if buyers only consider _______ costs.
A)higher; private
B)lower; private
C)lower; social
D)unchanged; social

Question

Quizplus · Accepted Answer

When a negative consumption externality is present, if buyers only consider their private costs and ignore the external costs they impose on others, the total surplus in the market will be lower than if social costs were considered. This is because the market outcome does not reflect the true cost to society, leading to overconsumption of the good or service.

When a Negative Consumption Externality Is Present in a Market