When a negative externality exists the market experiences
A)a level of production less than optimal.
B)a level of production that is greater than optimal.
C)a level of production that equals optimal.
D)a level of production where society maximizes benefits.

Question

Quizplus · Accepted Answer

When a negative externality exists, it means that the cost of producing a good or service is not fully borne by the producer or the consumer, but instead, part of the cost is imposed on third parties or society at large. This typically leads to overproduction relative to the socially optimal level, as the market does not account for the external costs.

When a Negative Externality Exists the Market Experiences