When the production of a good involves negative externalities,the marginal social cost curve will most likely ________.
A) be parallel to the horizontal axis
B) be parallel to the demand curve
C) lie above the supply curve
D) lie to the right of the supply curve

Question

Quizplus · Accepted Answer

When production involves negative externalities, such as pollution or congestion, the cost to society is greater than the cost to the producer. This means that the marginal social cost curve must lie above the supply curve, as it reflects the true cost of production to society. The demand curve and horizontal axis are not directly related to the issue of negative externalities.

When the Production of a Good Involves Negative Externalities,the Marginal