In a situation in which internal costs differ from social costs, we say that there exists a(n)

Name: In a situation in which internal costs differ from social costs, we say that there exists a(n)
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Question

Quizplus · Accepted Answer

When internal costs differ from social costs, i.e. either positive or negative effects spill over to individuals or parties other than those directly involved in the transaction, an externality occurs. This can lead to market failure and the suboptimal allocation of resources.

In a Situation in Which Internal Costs Differ from Social