The private equilibrium quantity is the socially optimal qu

The private equilibrium quantity is ____ the socially optimal quantity in the case of negative consumption externalities. From society\'s viewpoint it would be efficient for ____ of the product to be consumed.

In the case of negative production externalities, the marginal social cost is ____ the marginal private cost and producers will ____ the product in a free market.

One result of the Coase Theorem is that

Solution

1)

The private equilibrium quantity is greater than the socially optimal quantity in the case of negative consumption externalities. From society\'s viewpoint it would be efficient for less of the product to be consumed.

2)

In the case of negative production externalities, the marginal social cost is greater than the marginal private cost and producers will overproduce the product in a free market.

3)

One result of the Coase Theorem is that:

- the outcome in terms of whether the externality-generating activity occurs does not depend on the assignment of the property rights.