Consider some type of industrial pollution that generates air pollution.This industry,if left unregulated,will produce
A)too much output because they will ignore the marginal external costs.
B)the efficient level of output.
C)too little output because they will ignore the marginal external costs.
D)too little output because they will ignore the marginal external benefits.
E)too much output because they will ignore the marginal external benefits.

Question

Quizplus · Accepted Answer

If left unregulated, the industry will ignore the marginal external costs of its pollution, which means that it will only consider its private costs and benefits. Therefore, it will produce too much output, causing a negative externality on society. The efficient level of output would be achieved by taking into account the marginal external costs and benefits, which would lead to a reduction in output compared to the unregulated case.

Consider Some Type of Industrial Pollution That Generates Air Pollution