When a competitively produced product generates negative externalities in produc
ID: 1245434 • Letter: W
Question
When a competitively produced product generates negative externalities in production, the industry will A. over-produce the good because marginal social cost will exceed marginal social benefit in competitive equilibrium. B. over-produce the good because marginal private cost is less than marginal private benefit in competitive equilibrium. C. under-produce the good because marginal social cost will exceed marginal social benefit in competitive equilibrium. D, under-produce the good because marginal private social cost is less than marginal private benefit in competitive equilibrium in competitive equilibrium.Explanation / Answer
C. under-produce the good because marginal social cost will exceed marginal social benefit in competitive equilibrium.