A negative externality generates
A) a social cost curve that is above the supply curve (private cost curve) for a good.
B) a value to a consumer that is less than the total consumer surplus
C) a social cost curve that is below the supply curve (private cost curve) for a good.
D) a social value curve that is above the demand curve (private value curve) for a good.

Question

Quizplus · Accepted Answer

A negative externality imposes costs on third parties that are not reflected in the private cost of production. Therefore, the social cost curve would be higher than the supply curve because it includes both the private cost and the external cost imposed on third parties.

A Negative Externality Generates