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Why does the presence of negative externalities lead to a misallocation of societal resources? O because whenever external costs are imposed on outside parties, the good should NOT be produced at all because the government always intervenes in markets when negative externalities are present because less of the good is produced than is ideal for society because the producer fails to take into consideration some costs associated with production

Why does the presence of negative externalities lead to a misallocation of societal resources? O because whenever external costs are imposed on outside parties, the good should NOT be produced at all because the government always intervenes in markets when negative externalities are present because less of the good is produced than is ideal for society because the producer fails to take into consideration some costs associated with production

Economics (MindTap Course List)
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter30: Market Failure: Externalities, Public Goods, And Asymmetric Information
Section: Chapter Questions
Problem 8QP
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Why does the presence of negative externalities lead to a misallocation of societal resources? because whenever external costs are imposed on outside parties, the good should NOT be produced at all because the government always intervenes in markets when negative externalities are present O because less of the good is produced than is ideal for society because the producer fails to take into consideration some costs associated with production
Transcribed Image Text:Why does the presence of negative externalities lead to a misallocation of societal resources? because whenever external costs are imposed on outside parties, the good should NOT be produced at all because the government always intervenes in markets when negative externalities are present O because less of the good is produced than is ideal for society because the producer fails to take into consideration some costs associated with production
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