The externality associated with the production of electricity will lead the market to produce a larger quantity than socially desirable.

Question

Quizplus · Accepted Answer

The production of electricity often generates negative externalities such as pollution and greenhouse gas emissions that have harmful effects on the environment and public health. Since the market only considers the private costs and benefits of production, it will tend to produce more electricity than is socially optimal, leading to excessive pollution and resource depletion. This market failure can be addressed through government intervention, such as the implementation of pollution taxes or regulations, to internalize the external costs and align private incentives with social goals.

The Externality Associated with the Production of Electricity Will Lead