When production creates external costs greater than external benefits,a market is:
A) not producing the product without government intervention.
B) producing a socially optimal quantity of the product.
C) allocating too few resources to production of the product.
D) allocating too many resources to production of the product.

Question

Quizplus · Accepted Answer

When external costs exceed external benefits, the market tends to overproduce the product, leading to an allocation of too many resources to its production, as the market fails to account for the negative externalities.

When Production Creates External Costs Greater Than External Benefits,a Market