When the production of a good has a marginal external cost,which of the following occurs in an unregulated market?
i.Overproduction relative to the efficient level will occur.
ii.The market price is less than the marginal social cost at the equilibrium quantity.
iii.A deadweight loss occurs.
A) i only
B) ii only
C) iii only
D) i and ii
E) i, ii, and iii

Question

Quizplus · Accepted Answer

When a good's production has a marginal external cost, it means that not all costs of production are borne by the producer or consumer, leading to overproduction relative to the efficient level (i), a market price that is less than the marginal social cost at the equilibrium quantity (ii), and a resulting deadweight loss (iii).

When the Production of a Good Has a Marginal External