As a general rule, if pollution costs are external, firms will produce
A) too little of a polluting good.
B) too much of a polluting good.
C) an optimal amount of a polluting good.
D) cannot be determined without additional information.

Question

Quizplus · Accepted Answer

When pollution costs are external, firms do not bear the full cost of production, leading them to produce more than the socially optimal amount of the polluting good.

As a General Rule, If Pollution Costs Are External, Firms