When a negative externality exists, external costs are necessarily greater than private costs.

a. social costs equal private costs.

b. social costs are less than private costs.

c. social costs are greater than private costs.

d. none of the above

Question

Business

Jared Wilkerson

19 February, 18:47

When a negative externality exists, external costs are necessarily greater than private costs.

a. social costs equal private costs.

b. social costs are less than private costs.

c. social costs are greater than private costs.

d. none of the above

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Answers (1)

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Danielle Levine · Answer 1

Social costs are greater than private costs.

Option C

Explanation:

A negative externality happens if an individual or a company decides not to pay the full cost of the action. If a product has a negative externality, it costs society more than the customer spends.

If people have a share of the costs associated with the production of goods, negative externalities exist and have no influence over the associated production decisions.

For example, because of expanded manufacturing practices in its vicinity, parents will have to pay higher healthcare costs associated with pollution-led asthma in their kids.

When a negative externality exists, external costs are necessarily greater than private costs.a. social costs equal private costs.b. social costs are less than private costs.c. social costs are greater than private costs.d. none of the above

When a negative externality exists, external costs are necessarily greater than private costs.

a. social costs equal private costs.

b. social costs are less than private costs.

c. social costs are greater than private costs.

d. none of the above