If the social cost of a polluting industry are greater than the social benefits, the social surplus is negative. True False

The statement is **True**. Here's the reasoning: 1. **Definitions**: - **Social Cost**: This refers to the total cost to society, including both private costs incurred by the industry and any external costs (like pollution) that affect third parties. - **Social Benefit**: This refers to the total benefit to society from the industry’s activities, including both private benefits and any external benefits. 2. **Social Surplus**: This is calculated as the difference between social benefits and social costs. It can be expressed as: \[ \text{Social Surplus} = \text{Social Benefits} - \text{Social Costs} \] 3. **Analysis**: - If the social costs of a polluting industry are greater than the social benefits, it means: \[ \text{Social Costs} > \text{Social Benefits} \] - Therefore, substituting this into the social surplus formula gives: \[ \text{Social Surplus} = \text{Social Benefits} - \text{Social Costs} < 0 \] - This indicates that the social surplus is negative. Thus, when the social costs exceed the social benefits, the social surplus is indeed negative.