Under what condition does a negative production externality occur
A)The equilibrium quantity of output is equal to the socially optimal quantity.
B)The equilibrium quantity of output is greater than the socially optimal quantity.
C)The cost to the consumer exceeds the cost to society.
D)The cost to the producer exceeds the cost to society.

Question

Quizplus · Accepted Answer

A negative production externality occurs when the equilibrium quantity of output is greater than the socially optimal quantity because the external costs are not accounted for, leading to overproduction.

Under What Condition Does a Negative Production Externality Occur