Why Do Negative Externalities Like Pollution Result in Inefficiency

question 100

Multiple Choice

Why do negative externalities like pollution result in inefficiency?

• A) Because producers artificially restrict their supply.
• B) Because producers ignore the external costs they impose on third-parties.
• C) Because producers manufacture more goods than people can afford to buy.
• D) Because producers will receive an unequal distribution of profits.

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Definitions:

Substituting Facts

The practice of replacing actual data or evidence with alternate information, often to sway opinions or decisions.

Conventional Wisdom

Widely accepted beliefs or notions that are perceived as unquestionable truths in society, regardless of their factual basis.

Evidence-Based Management

The practice of making managerial decisions and organizational practices based on the best available evidence from systematic research.

Intuition

An instinctive knowing or sense of understanding without the need for conscious reasoning.