If, due to externalities, marginal social costs exceed marginal private costs at a particular quantity in the production of a good, then production of the good is

Question

Quizplus · Accepted Answer

When marginal social costs exceed marginal private costs due to externalities, it means that not all costs of production are being accounted for by the producer. This typically leads to overproduction of the good beyond the socially efficient level, as the producer does not bear the full cost of production.

If, Due to Externalities, Marginal Social Costs Exceed Marginal Private