If a Production Process Creates Pollution,a Competitive Market Produces Excessive

question 92

Multiple Choice

If a production process creates pollution,a competitive market produces excessive pollution because

• A) the firms do not include the social cost of the pollution in their profit-maximizing decisions.
• B) the firms place too high a price on society's cost of inflation.
• C) people are not injured by the pollution.
• D) zero pollution is optimal.

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Definitions:

Inclined To Invest

Having a predisposition or a favorable attitude towards making investments, often with the expectation of achieving a financial return.

Business Firm

A company that produces goods and services for sale to individual consumers, other firms, or the government.

Capital Goods

Long-lasting goods used in the production of other goods or services, such as machinery, tools, and buildings.

Consumer Goods

Finished products consumed by individuals or households to satisfy their immediate wants or needs, such as food, clothing, and electronics.