A species of snakes became extinct due to pollution in a river where the snakes once lived.This is an example of
A)a market failure caused by an externality.
B)a market failure caused by market power.
C)a market failure caused by equality.
D)There is no market failure in this case.

Question

Quizplus · Accepted Answer

The extinction of a species due to pollution is an example of market failure caused by an externality. The pollution is caused by economic activities, yet the negative effects are not accounted for in the price of the goods or services produced. The cost of pollution is borne by society as a whole, including the loss of biodiversity and ecosystem services.

A Species of Snakes Became Extinct Due to Pollution in a River