If social returns to the production of a good are less than private returns, then we can conclude that relative to the social optimum, the good will be Group of answer choices overproduced and overpriced. overproduced and underpriced. underproduced and underpriced. None of these answers are correct underproduced and overpriced.

overproduced and under-priced.

Explanation:

If social returns to the production of a good are less than private returns, the good generates negative externality

A good has negative externality if the costs to third parties not involved in production is greater than the benefits. an example of an activity that generates negative externality is pollution. Pollution can be generated at little or no cost, so they are usually overproduced. Government can discourage the production of activities that generate negative externality by taxation. Taxation increases the cost of production and therefore discourages overproduction. Tax levied on externality is known as Pigouvian tax.

a corporation is legally separate from its owner, and it pays its own taxes.