A good that has social costs that exceed private costs has a quantity that is

Question

Quizplus · Accepted Answer

When social costs exceed private costs, it means that the production of the good is causing negative externalities that are not reflected in the market price. Therefore, the private cost is lower than the true cost imposed on society as a whole. This results in an overproduction of the good, as producers are not taking into account the harm caused by their actions. To reach a socially efficient outcome, the quantity of the good produced needs to be reduced, which can be achieved through government regulation, taxes, or other policy measures. Therefore, the quantity of the good is too high and needs to be lowered.

A Good That Has Social Costs That Exceed Private Costs