If a Market Generates a Negative Externality, the Social Cost

question 48

True/False

If a market generates a negative externality, the social cost curve is above the supply curve (private cost curve).

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Definitions:

Supplier Factories

Manufacturing facilities that produce goods or components for other companies, under contract or agreement.

Self-Serving Bias

The common human tendency to attribute positive events to one's own character but attribute negative events to external factors.

Fundamental Attribution Error

The tendency to overemphasize personal characteristics and ignore situational factors when judging others' behaviors.

Self-Fulfilling Prophecy

A belief or expectation that influences behavior in a way that causes the belief to become true.