Question

When producers intentionally or unintentionally pass some of the costs of production onto the community, the good is ______, causing ______ externalities to occur. Multiple choice question.

Answer 1

When producers intentionally or unintentionally pass some of the costs of production onto the community, the good is over-allocated, causing negative externalities to occur.

What does negative externality mean?

Negative externality means that the cost of production is greater than the benefits to third parties not involved in production of the goods or services. Goods that generate negative externality are overproduced. An example of an activity that generates negative externality is pollution.

Activities that generate negative externality can be taxed. This would increase the cost of production and discourage overproduction.

To learn more about externalities, please check: brainly.com/question/26266710