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maw [93]
3 years ago
13

When a negative externality exists, the private market produces?

Business
1 answer:
mart [117]3 years ago
4 0
The private market will produce more than the economically efficient output level. Also when there is a negative externality then the cost to producers will be less than the cost to society. Remember that a negative externality is a cost that is suffered by a third party as a result of an economic transaction. Also have in mins that externalities lead to market failure<span> because the price equilibrium </span>does<span> not reflect the true costs and benefits of a product.</span>
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