Suppose That a Firm Is Located Along a River

question 3

Multiple Choice

Suppose that a firm is located along a river.The firm uses water from the river to cool its machinery and returns the water to the river several degrees warmer,which has led to a decline in the fish population downstream of the firm.
If the firm does not have to pay for the damage to the downstream fish,the market equilibrium price will be ________ and the market equilibrium quantity will be _____.

• A)inefficiently high;inefficiently low
• B)inefficiently high;efficient
• C)inefficiently low;inefficiently high
• D)efficient;inefficiently low