An external cost in the production of a good creates a difference between the i. costs borne by the producer and the costs borne by society in general.
Ii. efficient quantity of output and the equilibrium quantity of output.
Iii. marginal social cost and the marginal private cost.

Question

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An external cost leads to a difference between the producer's costs and society's costs (i), affects the efficient vs. equilibrium output (ii), and creates a gap between marginal social and private costs (iii).

An External Cost in the Production of a Good Creates