Suppose That the XYZ Industry Produces a Product That Results

question 265

Multiple Choice

Suppose that the XYZ industry produces a product that results in negative external costs to society. This information suggests that

• A) resources are under-allocated to the industry.
• B) the equilibrium market price of the product includes the external costs borne by society.
• C) resources are over-allocated to the industry.
• D) at the market price, quantity demanded is less than quantity supplied.

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Definitions:

Polluter

An entity (individual, company, or other organization) that releases pollutants into the environment, causing pollution.

Pollution

The introduction of contaminants into the natural environment that cause adverse change, affecting air, water, and soil quality.

Life Cycle Assessment (LCA)

A technique used to assess the environmental impacts associated with all the stages of a product's life from raw material extraction through materials processing, manufacture, distribution, use, repair and maintenance, and disposal or recycling.

Cradle to Grave

Considering all stages of a product's life cycle, from raw material extraction (cradle) to disposal or recycling (grave).