Consider a market where production of the good is creating a negative externality. In the market equilibrium, there is a dead weight loss because the: social cost is greater than the internal benefit.
Option C
Explanation:
Market balance is achieved by comparing private and internal costs, but appropriate social benefits can be achieved by comparing social and internal benefits.
Social costs are higher than confidential costs with negative externalises, and social costs are higher than internal benefits in the context of a market balance.
Social benefits include those private benefits and about external production / consumption benefits. When a good has substantial external benefits, the social benefit exceeds the private benefit.
