What is a negative externality?(1 point)

Responses

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.

Negative externalities occur when the social cost of a good or service is lower than the private cost.
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 are subject to the free-rider problem.
Negative externalities are goods or services that are subject to the free-rider problem.

Negative externalities are goods or services that one consumer can limit another consumer's use of.

1 answer

The correct response is:

Negative externalities occur when the social cost of a good or service is higher than the private cost.

This indicates that the actions of an individual or company have effects on third parties that are not reflected in the market prices, leading to a cost that is borne by society as a whole.