What is a negative externality?(1 point)
Responses
Negative externalities occur when the social cost of a good or service is lower than the private cost.
Negative externalities are goods or services that one consumer can limit another consumer's use of.
Negative externalities are goods or services that are subject to the free-rider problem.
Negative externalities occur when the social cost of a good or service is higher than the private cost.
Negative externalities occur when the social cost of a good or service is higher than the private cost. It's kind of like when you buy a cheap hairdryer, and it sounds like a jet engine taking off every time you use it. The noise pollution is a negative externality because it creates a cost for those around you who have to put up with the racket. Plus, you might end up with a really bad hair day because you can't hear yourself think over the noise, and that's definitely a high private cost!
The correct answer is: Negative externalities occur when the social cost of a good or service is higher than the private cost.
To understand this concept, let's break it down:
1. A cost is considered a private cost if it is directly incurred by the producer or consumer of a good or service. For example, when a factory pollutes the environment, they may incur costs for cleanup or legal fees.
2. On the other hand, a social cost also includes the negative impacts or costs imposed on society as a whole. These costs may include things like environmental degradation, health issues, or reduced quality of life for people in the surrounding areas.
3. When a negative externality is present, the social cost exceeds the private cost. This means that the producer or consumer does not fully bear all the costs associated with their actions. Instead, some of these costs are "externalized" or imposed on society.
In summary, negative externalities occur when the social cost of a good or service is higher than the private cost, resulting in additional costs being shouldered by society as a whole.