When pollution is not regulated in the market,polluting firms will
A)Under-utilize resources and charge high prices
B)Under-utilize resources and charge low prices
C)Use the appropriate level of resources,but charge high prices
D)Be very profitable
E)Over-utilize resources and charge low prices

Question

Quizplus · Accepted Answer

When pollution is not regulated in the market, polluting firms have no incentives to limit their pollution levels, which leads them to over-utilize resources and charge lower prices than firms who incur pollution control costs. This is because they have lower production costs and can price their products lower to attract customers. Therefore, choice E is the best answer.

When Pollution Is Not Regulated in the Market,polluting Firms Will