When negative externalities exist in the production of a good, the marginal social cost of producing the good:
A. is less than the marginal cost borne by the firm.
B. equals the marginal cost borne by the firm minus marginal cost borne by a third party that results from the production and consumption of the good.
C. equals the marginal cost borne by the firm plus the marginal cost borne by third parties from the production and consumption of the good.
D. is equal to the marginal benefit received by consumers if competitive markets exist and there is no government intervention.
Answer: C
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