-When consumers or producers do not bear the full cost of their economic decisions, they tend to produce or consume more than they otherwise would.

Question

Quizplus · Accepted Answer

This situation is known as a market failure due to externalities, where the full social cost or benefit of a decision is not reflected in the market transactions of producers or consumers, leading to overconsumption or overproduction relative to the socially optimal level.

-When Consumers or Producers Do Not Bear the Full Cost