A situation in which a private cost diverges from a social cost is

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An externality is a situation in which a private cost diverges from a social cost. Private costs refer to costs that are directly incurred by individuals or firms, while social costs include costs that are borne by society as a whole. When private costs diverge from social costs, externalities occur, which can have a negative impact on society. Examples of externalities include pollution and traffic congestion.

A Situation in Which a Private Cost Diverges from a Social