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12 July, 20:51

When a business produces a product that creates external costs?

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  1. 12 July, 23:56
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    The business produces a level of output at the same level as it would produce without the external costs.

    This means that the company considers the level of output independent of the external costs, despite creating them. This approach is taken because they are external to the business or company, and, therefore, not a factor for the company's decision-making process and production decisions. External consequences can correct this decision-making process.
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