When a Competitively Produced Product Is Subject to Negative Externalities

Multiple Choice

When a competitively produced product is subject to negative externalities in production, the industry will

A) overproduce the good because marginal social cost will exceed marginal social benefit in competitive equilibrium.
B) overproduce the good because marginal private cost is less than marginal private benefit in competitive equilibrium.
C) underproduce the good because marginal social cost will exceed marginal social benefit in competitive equilibrium.
D) underproduce the good because marginal private social cost is less than marginal private benefit in competitive equilibrium in competitive equilibrium.