Which of the following statements is true?
A)Externalities can never refer to costs borne by the seller.
B)Both external costs and external benefits can never exist for the same good.
C)Externalities can never lead to under-production of a specific good.
D)External benefits can never exceed external costs.

Question

Which of the following statements is true?
A)​Externalities can never refer to costs borne by the seller.
B)​Both external costs and external benefits can never exist for the same good.
C)​Externalities can never lead to under-production of a specific good.
D)​External benefits can never exceed external costs.

Quizplus · Accepted Answer

Externalities can indeed refer to costs borne by the seller, such as when a company bears the cost of pollution abatement. The other statements are incorrect because externalities can lead to both under-production and over-production of goods, and both external costs and benefits can exist for the same good, sometimes with benefits exceeding costs.

Which of the Following Statements Is True