Economists view pollution as an economic problem that arises because
A)private enterprise always minimizes the amount of pollution produced
B)profitable firms rarely pollute
C)as the economy grows, the level of pollution declines
D)firms that pollute do not pay the full social cost of producing their output
E)pollution costs are borne by the consumer

Question

Quizplus · Accepted Answer

Economists consider pollution an economic problem because firms that pollute do not pay the full social cost of producing their output. This means that the cost of pollution is not fully accounted for in the price of the product, leading to an inefficient allocation of resources and an overproduction of pollution. By requiring firms to pay the full social cost of their pollution, the market can be more efficient and produce a socially optimal level of pollution.

Economists View Pollution as an Economic Problem That Arises Because