When a negative externality is present in a market,total surplus is:
A)lower when buyers only consider private costs.
B)higher when buyers only consider private costs.
C)lower when buyers consider social costs.
D)None of these statements is true.

Question

Quizplus · Accepted Answer

When a negative externality is present, the market fails to account for the external costs, leading to overproduction and a lower total surplus when only private costs are considered.

When a Negative Externality Is Present in a Market,total Surplus