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The production or consumption of an economic good that generates a negative externality results in A. overproduction of the good and a price that is lower than marginal social cost. B. underproduction of the good and a price that is higher than marginal social cost. C. overproduction of the good and a price that is higher than marginal social cost. D. underproduction of the good and a price that is lower than marginal social cost.

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Answer: Option C

Explanation:Negative externality refers to the bad impacts that an unrelated party faces due to the decisions taken by some other party.

Negative externality causes a higher marginal social cost than the marginal private cost. The producers do not consider social cost in their production which will eventually lead to higher social cost then price which is optimal and overproduction of goods.

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