Question

The existence of a negative externality means that the market

demand curve is too far to the right

demand curve is too far to the left

supply curve is too far to the right

supply curve is too far to the left

demand and supply curves correctly measure societal costs and benefits

Answer 1

Option 3. The supply curve is too far to the right

Explanation: In the case of a negative externality, the private cost is lower than the social cost. Therefore, the supply curve is too far to the right.