When negative externalities exist, an unregulated market will produce _____ of the good, and the price will be _____ when compared to the socially optimal production.

Question

Quizplus · Accepted Answer

Negative externalities cause markets to produce more of a good than is socially optimal because not all costs are internalized. This overproduction leads to a price that is lower than what would be considered socially optimal, as the external costs are not reflected in the market price.

When Negative Externalities Exist, an Unregulated Market Will Produce _____