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QUESTION
When there is negative externality, why is there a market failure?
When there is negative externality, why is there a market failure?
Because at the market equilibrium quantity (QMKT), the MC of society (MCSO) exceeds the MB to society (MBSO).
Because at the market equilibrium quantity (QMKT), the market demand is not equal to the market supply.
Because at the socially optimum quantity (QSO), the MC of society (MCSO) exceeds the MB to society (MBSO).
Because at the market equilibrium quantity (QMKT), the MB of society (MBSO) exceeds the MC to society (MCSO).
