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.

---

Definitions:

Return on Assets

A ratio indicating how efficiently a company is using its assets to generate profit, calculated as net income divided by total assets.

Earnings Per Share

A metric that divides a company's profit available to its common stockholders by the average outstanding shares.

Debt-to-Equity

A metric illustrating the comparative levels of a company's debt and shareholder equity utilized in asset financing.

Long-Term Bonds Payable

Bonds that are due for repayment after a period exceeding one year from the balance sheet date.