If a transaction imposes external costs,then:

Name: If a transaction imposes external costs,then:
Brand: Quizplus
Rating: 4.8 (41 reviews)

Question

Quizplus · Accepted Answer

When a transaction imposes external costs, the market fails to consider the negative impact of the activity on third parties. This results in too much of the good or service being produced, i.e., the market produces more than the socially optimal amount. Therefore, to address the external costs, the production of the good or service needs to be reduced to achieve the socially optimal amount.

If a Transaction Imposes External Costs,then