Dioxin emission that results from the production of paper is a good example of a negative externality because
A)self-interested paper firms are generally unaware of environmental regulations.
B)there are fines for producing too much dioxin.
C)self-interested paper producers will not consider the full cost of the dioxin pollution they create.
D)toxic emissions cause firms to produce less than the socially optimal amount of paper.

Question

Quizplus · Accepted Answer

Self-interested paper producers may not account for the environmental damage caused by dioxin emissions in their production costs, leading to more pollution than is socially optimal. This is a classic example of a negative externality, where the full costs of production (including environmental damage) are not borne by the producer.

Dioxin Emission That Results from the Production of Paper Is