Question

when external costs are significant, which of the following statements is true at the market equilibrium?
a. private value exceeds social cost, and the quantity is too high.
b. private value exceeds social cost, and the quantity is too low.
c. social cost exceeds private value, and the quantity is too high.
d. social cost exceeds private value, and the quantity is too low.
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multiple choice
a
b
c
d
e
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Explanation:

当存在显著外部成本（如污染等负外部性）时，社会成本（私人成本 + 外部成本）会高于私人成本。在市场均衡状态下，生产者只考虑私人成本，按私人成本等于私人价值（需求曲线）来确定产量。由于社会成本高于私人成本，从社会最优角度看，此时产量过高（因为如果考虑社会成本，价格会更高，产量会更低）。

Answer:

C. Social cost exceeds private value, and the quantity is too high.