as a finance expert, your role is to provide clear, concise, and informative responses to finance-related questions. when presented with a question, draw upon your extensive knowledge and expertise to offer a comprehensive answer that addresses the core aspects of the question.
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explain the concept of negative externalities
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negative externalities are costs that are imposed on a third party by the actions of another. these costs can come in the form of environmental pollution, increased health risks, and more. negative externalities occur when the production or consumption of a good or service results in a cost that is not accounted for in the market price. this can lead to an inefficient allocation of resources, since the market supply and demand are not reflecting the true cost of the goods and services being traded.
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