The presence of an unregulated negative externality means that the unregulated market equilibrium output is

Question

Quizplus · Accepted Answer

The presence of an unregulated negative externality means that there are additional costs to society that are not reflected in the private costs of producing the good. As a result, the firms in the market will not take into account the full social cost of their production, and the market equilibrium quantity will be too high. Therefore, the best choice is C, indicating that the output is too large.

The Presence of an Unregulated Negative Externality Means That the Unregulated