In a market experiencing negative externalities, such as pollution, which of the following scenarios is likely to occur in terms of supply and demand?

In a market with negative externalities like pollution, the supply and demand can be affected significantly. When a company produces goods but also creates pollution, the true cost of making those goods is higher than what consumers pay. This means that the supply curve does not reflect the full cost of production, leading to overproduction of the goods that harm the environment. For example, if a factory makes cheap toys but pollutes the air, people might buy more toys because they don't see the pollution costs reflected in the price. Ultimately, this creates a situation where the market equilibrium is not efficient, as it does not account for the negative effects on society, like health issues from pollution.