When a firm produces a product that creates external costs
A) the firm produces a level of output larger than would be produced without the external cost.
B) the firm produces a level of output smaller than would be produced without the external cost.
C) the firm produces a level of output which would be the same as it would produce without the external cost.
D) the market provides the efficient level of output even with the existence of the external cost.
Answer: A
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