When negative externalities are present in a market:
A)individuals are not taking into account all the costs associated with their market choices.
B)society bears part of the cost of private transactions.
C)production and consumption are above the socially optimal level.
D)All of these are true.

Question

Quizplus · Accepted Answer

All of these statements accurately describe the effects of negative externalities in a market. Negative externalities occur when the production or consumption of a good or service imposes costs on third parties not involved in the transaction, leading to outcomes where individuals do not account for the full social costs of their actions, society bears part of the costs, and production and consumption exceed the levels that would be socially optimal.

When Negative Externalities Are Present in a Market