If,while producing goods and services,a factory is producing pollution and not incurring the cost of this pollution,then a(n)________ exists.
A) government failure
B) market failure
C) acceptable outcome
D) none of the above

Question

Quizplus · Accepted Answer

This is a classic example of market failure where the cost of pollution is not included in the price of goods and services. Therefore, the market fails to account for the negative externalities associated with production, and as a result, pollution is produced beyond the socially optimal level. The market outcome is not efficient, and government intervention may be necessary to correct this market failure through regulations, taxes, or permits.

If,while Producing Goods and Services,a Factory Is Producing Pollution and Not