Generating electricity creates air pollution. This industry, if left unregulated will produce at an inefficient market equilibrium where

Question

Quizplus · Accepted Answer

When an industry like electricity generation creates air pollution and is left unregulated, it typically produces at a level where the marginal social cost (which includes the external costs of pollution) is higher than the marginal social benefit. This discrepancy leads to a deadweight loss, indicating that the market equilibrium is inefficient.

Generating Electricity Creates Air Pollution