Question

Which of the following are correct in presence of negative externalities?
A. Negative externalities lead to an inefficient allocation of resources.
B. Marginal external cost curve is added vertically to the private marginal cost curve to yield the social marginal cost curve.
C. The efficient level of output attained is more than the market equilibrium output.
D. The intersection of the marginal social cost curve with the demand curve gives the efficient level of output
Choose the correct answer from the options given below:

• A. A, C only
• B. C, D only
• C. A, B and D only
• D. B, C, D only

Answer 1

Answer: (C)

A, B and D only

Answer 2

The correct option is(C): A, B and D only