A Buyer Values a Good at $60 While the Good

question 9

Multiple Choice

A buyer values a good at $60 while the good costs a seller $50 to make and sell.The good is sold for a price of $55.Making the good results in pollution that harms people not directly involved in the transaction.When will this transaction result in a market failure?

• A) Only when the cost of the pollution exceeds $10.
• B) When the pollution has any cost.
• C) Only when the cost of pollution exceeds $5.
• D) Only when the cost of pollution exceeds $60.