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

question 1

Multiple Choice

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

• A) private marginal cost of pollution exceeds its social marginal cost.
• B) social marginal cost of pollution exceeds its private marginal cost.
• C) the marginal benefit of pollution to the firm is zero.
• D) zero pollution is optimal.

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Definitions:

Water Table

The level below the Earth's surface at which the ground becomes saturated with water.

Groundwater

Water that occupies the pores and fractures in rock and soil beneath the Earth's surface, an important source of fresh water.

Lake

A large body of water surrounded by land, often formed by tectonic, volcanic, or glacial activity.

Groundwater

The water found under the surface of the Earth, occupying spaces in soil and cracks in geological formations.