Question

f a negative externality exists, then there is a __________ when society produces the market output instead of the socially optimal output. This exists because the __________ to sellers and third parties are __________ the __________ derived by buyers.

Answer 1

The missing words are:

A) dead weight loss;

B) Incentive

C) Negative to

D) Benefit

Cheers!

Answer 2

1. Net social cost

2. Costs

3. Greater than

4. Benefits

Step-by-step explanation:

If a negative externality exists, then there is a net social cost when society produces the market output instead of the socially optimal output. This exists because the costs to sellers and third parties are greater than the benefits derived by buyers.