In the case of a negative externality, social marginal cost:
A) Exceeds private marginal cost.
B) Equals private marginal cost.
C) Is less than private marginal cost.
D) Is not related to private marginal cost.
E) It is not possible to answer this question without additional information about the structure of the industry.

Question

Quizplus · Accepted Answer

Negative externalality implies that the social marginal cost exceeds the private marginal cost because it includes external costs not borne by the producer.

In the Case of a Negative Externality, Social Marginal Cost