A negative externality results from the sale of firewood in competitive markets.It then follows that the marginal private:

Question

Quizplus · Accepted Answer

A negative externality occurs when the actions of an economic agent impose costs on third-party individuals who are not involved in the original transaction. In this case, the sale of firewood is likely to result in pollution and damage to the environment, which imposes costs on society as a whole. The marginal private cost of firewood is the cost of production and supply borne by the seller, whereas the marginal social cost includes the additional costs imposed on society. The fact that firewood has a negative externality means that the marginal private cost is less than the marginal social cost, hence the correct answer is A.

A Negative Externality Results from the Sale of Firewood in Competitive