Negative externalities lead to an underallocation of resources in that area relative to that which is socially desirable.

Name: Negative externalities lead to an underallocation of resources in that area relative to that which is socially desirable.
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Question

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Negative externalities lead to an overallocation of resources in that area relative to that which is socially desirable, as the external costs are not reflected in the market prices.

Negative Externalities Lead to an Underallocation of Resources in That