Negative externalities are seen when an individual or firm makes a decision and doesn't have to pay the full cost of the decision. If a good has a negative externality, the cost to society is greater than the cost the consumer is paying for it. This results in inefficiencies and welfare loss, and the welfare can be gained by reducing the quantity produced. A tax is one way to reduce the quantity produced to the socially optimal levelWhen the external negative effects of integration, incremental costs to society shows from this point the market has to take into consideration the effects that occur at the third point. The slope of a line, which is equal to MSB MSC at the performance of the market as of the socially efficient level of price and quantity Q is socially efficient quantity or another social optimum social optimum, or P Q can see that if you do not have to take into consideration the negative impact of external occurred that third party. The quantity will be greater than expected, or the most Overproduced corresponds to P competitive than socially efficient quantity: P point.
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