Respuesta :
Answer:
Option (C) is correct.
Explanation:
In an unregulated market, negative externality results in a higher social marginal cost than the firm marginal cost because this market is not properly regulated by the government officials. Hence, these firms are not taking into account the effect of negative externalities in their cost.
We know that the consumer's decision is more offenly based on the point where the marginal cost is equal to the marginal benefit because they are not taking the impact of negative externalities.
If proper action is not taken by the government, negative externality will result in a market inefficiencies.
When the consumption or production of a certain good or service has an impact on a third party who is not directly tied to the production or consumption of that good or service, it is called an externality.
Option C will result in an unregulated market and create negative externalities.
The reasons for the creation of negative externalities:
- Negative externality causes a larger societal marginal cost (SMC) than the firm marginal cost (FMC) in an unregulated market because the market is not appropriately regulated by government officials.
- As a result, these businesses do not factor negative externalities into their costs.
- We know that consumers make decisions based on the point where the marginal cost (MC) equals the marginal benefit (MB) because negative externalities are not taken into account.
- Negative externality will result in market inefficiencies if the government does not take appropriate measures.
For more information about externalities, refer below:
https://brainly.com/question/5301972
