In the absence of government intervention, goods with external costs tend to be

Question

Quizplus · Accepted Answer

When goods have external costs, producers do not take into consideration the cost that their production has on society. As a result, they continue to produce the good even if it creates negative externalities such as pollution or increased healthcare costs for society. This leads to an overproduction of the good and an inefficient allocation of resources.

In the Absence of Government Intervention, Goods with External Costs