If there is a negative externality, and the market output is 100 units more than the socially optimal output, then it follows that
A. the external costs associated with the negative externality are greater than the marginal private costs.
B. the external costs associated with the negative externality are less than the marginal private costs.
C. there is market failure.
D. any tax imposed on the production of the output will bring about the socially optimal output.
E. none of the above
Answer: C
Economics
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