Pollution is caused by a market failure, in an industry in which there is
A) unemployment.
B) an over-allocation of resources in production.
C) excess demand.
D) excessive cost borne by the firm.

Question

Quizplus · Accepted Answer

Pollution is often the result of a market failure due to over-allocation of resources in production. This occurs when firms do not take into account the external costs of their production processes, such as pollution, and therefore overproduce and pollute beyond what is socially optimal.

Pollution Is Caused by a Market Failure, in an Industry