Suppose a Paper Mill Emits Noxious Odors That Represent a Negative

question 4

Multiple Choice

Suppose a paper mill emits noxious odors that represent a negative externality for people living near the plant. If the plant managers ignore these external effects on their neighbors, what is the efficiency character of the resulting market outcome?

• A) The plant generates too much paper due to incomplete information.
• B) The plant generates too much paper because the odors are nonexclusive.
• C) The plant generates too much paper because the managers ignore the external costs of the air pollution on the neighbors.
• D) The market outcome is efficient.

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Definitions:

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Plants of the Solanum tuberosum species, cultivated for their starchy tubers, which are a staple food in many parts of the world; their failure or success can significantly impact economies.

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A social group consisting of people with the highest social status, often possessing wealth, inherited titles, or influential positions.

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Fundamental beliefs or principles that are held in common by members of a group, community, or culture, fostering unity and cooperation.