If there are no externalities, a competitive market achieves economic efficiency.If there is a negative externality, economic efficiency will not be achieved because
A)too little of the good will be produced.
B)too much of the good will be produced.
C)a deadweight loss will occur that is equal to the area under the demand curve for the good.
D)economic surplus is maximised.

Question

Quizplus · Accepted Answer

In the presence of a negative externality, the market will produce too much of the good from society's perspective, leading to overproduction and inefficiency. This occurs because the market price does not account for the full social costs of production, and thus producers are not incentivized to reduce output to the socially optimal level. As a result, the market fails to achieve economic efficiency.

If There Are No Externalities, a Competitive Market Achieves Economic