Which of the following is true concerning negative externalities?
A) Firms tend to produce more than the efficient level of output.
B) Society gains because firms do not pay the external costs of production.
C) Perfect competition is better than monopoly from the viewpoint of society even in the presence of negative externalities.
D) With negative externalities, a monopoly will always produce an output level less than is socially efficient.

Question

Quizplus · Accepted Answer

In the presence of negative externalities, firms tend to produce more than the socially efficient level of output as they do not bear the full cost of production due to external costs being imposed on society.

Which of the Following Is True Concerning Negative Externalities