Generating electricity using coal creates air pollution. This industry, if left unregulated, will produce
A) more than the efficient level of output.
B) the efficient level of output.
C) less than the efficient level of output.
D) sometimes more and sometimes less than the efficient level of output.

Question

Quizplus · Accepted Answer

Coal-generated electricity creates negative externalities, such as air pollution, which are not accounted for in the market price. This leads to overproduction, or more than the efficient level of output, as the social cost exceeds the private cost.

Generating Electricity Using Coal Creates Air Pollution