When negative externalities are present in a market,it means that:
A) private costs are less than social costs.
B) private costs are less than external costs.
C) social costs are less than external costs.
D) external costs are equal to social costs.

Question

Quizplus · Accepted Answer

Negative externalities refer to the costs imposed on third parties not involved in a transaction. These costs are borne by society, whereas private costs are borne solely by the individual or firm involved in the transaction. Thus, when negative externalities are present, private costs are less than social costs, as the social costs include both the private costs and the external costs imposed on society.

When Negative Externalities Are Present in a Market,it Means That