Question

How do externalitiesLOADING... affect​ markets?

If a negative externality in production is present in a​ market, then
A.the market will achieve economic efficiency.
B.the private cost of production will be different than the social cost of production.
C.the private cost of production will be equal to the private benefit from consumption.
D.the private benefit from consumption will be different than the social benefit from consumption.
E.the social cost of production will be equal to the social benefit from consumption.

Answer 1

In a market with a negative externality in production, the private cost of production will be different than the social cost of production, leading to overproduction.

Step-by-step explanation:

In a market with a negative externality in production, the private cost of production will be different than the social cost of production. This means that the cost to society as a whole will be higher than the cost to the individual producer. As a result, the market will produce more of the product than is socially desirable.