Assume that production of a good imposes external costs on others. the equilibrium price will be too low and the equilibrium quantity too high for efficient resource allocation.
What is economics?
Economics can be defined as a social science which studies human relationship in relation to ends and scarce means which have alternative uses.
So therefore, assume that production of a good imposes external costs on others. the equilibrium price will be too low and the equilibrium quantity too high for efficient resource allocation.
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