Basic supply and demand analysis can be used to explain how externalities lead to environmental problems.

Question

Quizplus · Accepted Answer

Externalities, such as pollution and resource depletion, are often not included in the market price of goods and services. This leads to an imbalance in supply and demand, as consumers are not fully aware of the true cost of consuming or producing certain goods. As a result, there is overconsumption and underproduction of goods that have negative externalities, leading to environmental problems.

Basic Supply and Demand Analysis Can Be Used to Explain