Question

A negative externality occurs when Question 16 options: the private marginal costs are equal to the social marginal costs. the private marginal costs are less than the social marginal costs. the private marginal benefits are less than the social marginal benefits. the private marginal costs are greater than the social marginal costs.

Answer 1

When a negative externality exists, the marginal social cost is always higher than the marginal private cost. So, the correct answer is option A the private marginal costs are less than social marginal costs.

What is a negative externality?

When the manufacturing process has a negative impact on unconnected third parties, this is referred to as a negative production externality. For instance, manufacturing facilities contribute to noise and air pollution throughout the production process.

What happens when a negative externality exists?

The marginal social cost and the marginal private cost are no longer equal when a market has negative production externalities. As a result, the supply curve (which indicates the marginal private cost) does not accurately reflect the marginal societal cost and the social cost is instead larger due to the externality's per-unit cost.

You can learn more about negative externality using the following link:

brainly.com/question/13901028

#SPJ4