If there is a divergence between private and social costs,
A. inefficiency may exist due to underproduction.
B. an external benefit must exist.
C. the difference between the costs is the external cost.
D. the government must take action to correct it.
Answer:C
If there is a divergence between private and social costs,
A. inefficiency may exist due to underproduction. B. an external benefit must exist. C. the difference between the costs is the external cost. D. the government must take action to correct it.