When negative externalities are present

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When negative externalities are present:

1. Firms tend to produce more than the efficient level of output, and sell at too low a price.

2. Society gains because firms do not pay the external costs of production.

3. Perfect competition is better than monopoly from the viewpoint of society even in the presence of negative externalities.

4. With negative externalities, a monopoly will always produce an output level less than is socially efficient.

Reference no: EM131393779

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