Pollution-generating companies tend to overproduce because
A) consumers want something as compensation for the pollution.
B) the supply curve of the firm incorporates only the private costs of production.
C) the private costs exceed the social costs.
D) consumers pay for waste disposal in the price of the product.
E) they have extra profits to spend on advertising.

Question

Quizplus · Accepted Answer

The supply curve of a firm typically reflects its private costs of production, not the external costs (such as pollution) that are borne by society. This can lead to overproduction since the firm does not directly bear the full cost of its production activities.

Pollution-Generating Companies Tend to Overproduce Because