A chemical-producing firm is located just upstream from an electric power plant.Instead of the more expensive procedure of burying its wastes,the chemical-producing firm begins dumping its waste into the stream.This causes increased variable costs for the power plant,which uses water from the stream to cool its turbines.From society's viewpoint,the chemical producer's pollution causes an

Question

Quizplus · Accepted Answer

The pollution from the chemical producer leads to external costs not accounted for in the market price, resulting in overproduction of chemicals and underproduction of electric power due to increased costs for the power plant.

A Chemical-Producing Firm Is Located Just Upstream from an Electric