In a competitive market, if the production process involves an external cost, such as pollution of the environment, the market will
A) produce the economically efficient outcome.
B) result in a market price that is higher than the efficient one.
C) register a price that is lower than the efficient one.
D) result in too little of the good being produced compared to the ideal efficient outcome.

Question

Quizplus · Accepted Answer

When there is an external cost like pollution, the market price does not reflect the true cost of production, leading to overproduction and a price lower than the efficient one.

In a Competitive Market, If the Production Process Involves an External