If a production process involved the creation of a negative externality,then the social cost of production would be:
A) larger than the private cost of production.
B) the same as the private cost of production.
C) smaller than the private cost of production.
D) zero.

Question

Quizplus · Accepted Answer

A negative externality is a cost imposed on a third party as a result of production or consumption that is not taken into account by the producer or consumer. The private cost of production only considers the cost to the producer, while the social cost includes the cost to the producer as well as the cost to the third party affected by the negative externality. Therefore, the social cost of production would be larger than the private cost of production.

If a Production Process Involved the Creation of a Negative