Which of the following observations is true?
A)Environmental damage can be reduced to zero.
B)Pollution results from a price mechanism malfunction.
C)Charging those who emit pollution is not a way of dealing with pollution problems.
D)Public interest requires pollution be maintained at its free-market level.

Question

Quizplus · Accepted Answer

Pollution is a negative externality resulting from a price mechanism malfunction where the cost of the pollution is not fully borne by the polluter. Therefore, the solution to reducing pollution is to correct this market failure by imposing a price on pollution through taxes or cap-and-trade systems. The other options are not accurate observations. Environmental damage cannot be reduced to zero, as there will always be some impact on the environment. Charging those who emit pollution is a way of dealing with pollution problems, as mentioned earlier. Lastly, public interest requires that pollution be reduced to a level that is socially optimal, not at its free-market level.

Which of the Following Observations Is True