An example of a market failure due to a firm not fully bearing the costs of its production decision is:
A) profit.
B) imperfect information.
C) pollution.
D) a levee.

Question

Quizplus · Accepted Answer

When a firm produces goods that result in pollution, it may not fully bear the costs of cleaning up and addressing the negative externalities. This can lead to market failure as the costs are passed on to society and not reflected in the price of the product.

An Example of a Market Failure Due to a Firm