Environmental pollution is an economic problem because
A) levels of pollution decline as the rate of economic growth increases.
B) firms that maximize profits rarely pollute.
C) capitalist market economies normally minimize pollution-causing activities.
D) firms and individuals that pollute pay less than the true social cost of disposing of their wastes.
E) it is a sign that the price system is functioning in an optimal way.

Question

Quizplus · Accepted Answer

Environmental pollution is an economic problem because firms and individuals that pollute usually do not bear the full cost of disposing of their wastes. As a result, the cost of pollution is externalized to society and the environment, leading to negative impacts on human health, natural ecosystems, and economic activities. This is known as a market failure, where the price system fails to reflect the true social cost of production and consumption. Therefore, addressing environmental pollution requires policies and regulations that internalize these costs and incentivize cleaner and more sustainable production and consumption practices.

Environmental Pollution Is an Economic Problem Because