When does a negative externality exist?
A)When there are quantity controls in a market
B)When there are price controls in a market
C)When the marginal social cost of producing a good or service exceeds the private cost
D)When the marginal private cost of producing a good or service exceeds the social cost

Question

Quizplus · Accepted Answer

A negative externality exists when the marginal social cost of producing a good or service exceeds the private cost, meaning the production or consumption of a product results in a cost to a third party who did not agree to the action causing the cost.

When Does a Negative Externality Exist