If a copper mining operation discharges waste products into a river and causes higher costs and discomfort to downstream users of the water for which they are not compensated, then:
A) too few of society's resources are being used to produce copper.
B) too many of society's resources are being used to produce copper.
C) the ideal amount of society's resources is being used to produce copper.
D) there is an external benefit to society from copper production.

Question

Quizplus · Accepted Answer

If the copper mining operation is causing higher costs and discomfort to downstream users, it means that the negative externalities of the operation are not being accounted for in the production cost. This implies that too many resources are being used to produce copper as the social cost (private cost + external cost ) is greater than the private cost that the mining company considers, leading to an overproduction of copper.

If a Copper Mining Operation Discharges Waste Products into a River