If people took externalities like pollution into consideration,on balance they would consume less of the good causing these externalities.This tells us:
A)the market equilibrium is not maximizing surplus.
B)the efficient outcome for society is at a lower quantity.
C)market discouraging actions,like taxation,can help bring efficiency to markets where externalities are present.
D)All of these statements are true.

Question

Quizplus · Accepted Answer

If people take externalities like pollution into consideration, they will consume less of the good causing the externalities. This means that the market equilibrium is not maximizing surplus, and the efficient outcome for society is at a lower quantity. In order to bring efficiency to markets where externalities are present, market discouraging actions such as taxation can be used. Therefore, all of these statements are true.

If People Took Externalities Like Pollution into Consideration,on Balance They