If the marginal cost of producing a product, including the externality, is higher than the marginal cost when the externality is ignored, then which of the following must be true?
A. The production of the product generates a negative externality.
B. The production of the product generates a positive externality.
C. The price of the product is too high compared to what would be socially ideal.
D. The production of the product is too small compared to the ideal amount.
Answer: A
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