When there are external costs to production,output produced in a competitive market:
A)is less than the efficient level.
B)is more than the efficient level.
C)increases with an imposition of a tax on the commodity.
D)eventually falls to zero.

Question

Quizplus · Accepted Answer

When there are external costs to production, such as pollution, the market tends to produce more than the efficient level because producers do not bear all the costs of production, leading to overproduction relative to the socially optimal level.

When There Are External Costs to Production,output Produced in a Competitive