Government intervention to reduce the level of pollution is prompted by the existence of
A)An inequitable distribution of income.
B)Negative externalities.
C)A monopoly.
D)Government failure.

Question

Quizplus · Accepted Answer

Pollution creates negative externalities, which are the costs incurred by third parties who are not directly involved in the production or consumption of a good or service. This creates a market failure, as the cost of pollution is not reflected in the price of the product, leading to overproduction and excessive pollution. Government intervention in the form of regulations or taxes can help to internalize the cost of pollution and reduce the negative externalities associated with it. Choices A, C, and D are irrelevant to the issue of pollution.

Government Intervention to Reduce the Level of Pollution Is Prompted