Consider some type of industrial pollution that generates air pollution. This industry, if left unregulated, will produce
A)more than the efficient level because they will ignore the marginal external costs.
B)the efficient level of output.
C)less than the efficient level because they will ignore the marginal external costs.
D)less than the efficient level because they will ignore the marginal external benefits.
E)more than the efficient level because they will ignore the marginal external benefits.

Question

Quizplus · Accepted Answer

Industries that are not regulated are likely to produce more than the efficient level because they ignore the marginal external costs of their production, such as the harm caused to the environment and to people's health. Therefore, they will not take into account the negative externalities they are imposing on society, which leads to overproduction.

Consider Some Type of Industrial Pollution That Generates Air Pollution