In the case of negative externalities in production, the firm's internal costs:
A) exceed the external costs.
B) are less than the external costs.
C) equal the external costs.
D) understate the true cost of producing the product.

Question

Quizplus · Accepted Answer

Negative externalities in production mean that there are additional costs to society that are not accounted for by the firm. Therefore, the firm's internal costs understate the true cost of producing the product, as they do not include these external costs.

In the Case of Negative Externalities in Production, the Firm's