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MMLU / When the production of a good generates negative externalities, the private…

Problem

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question

When the production of a good generates negative externalities, the private market will

choices

  1. overproduce the good relative to the socially optimal level of output
  2. underproduce the good relative to the socially optimal level of output
  3. compensate the third parties harmed by the negative externality
  4. charge lower than the market equilibrium price to compensate for the externality

subject

miscellaneous

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Source and history

Official source

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