Pollution would be an example of a market failure because it
A)represents imperfect information.
B)is often caused by firms that are a monopolies.
C)is a non-excludable public good.
D)represents an externality where costs of production are born by someone other than the producer.

Question

Quizplus · Accepted Answer

Pollution represents a negative externality, where the costs of production (e.g. pollution) are not fully borne by the producer but are imposed on society. This results in an inefficient allocation of resources and is considered a market failure. A and B do not accurately describe the nature of pollution as a market failure, and C is incorrect as pollution is not a public good, but rather a negative externality.

Pollution Would Be an Example of a Market Failure Because