A paper manufacturing plant dumps pollution into the Salmon Arm. This pollution leads to higher costs and disruption for fishermen on the river, for which they are not compensated. In this situation:

Question

Quizplus · Accepted Answer

The pollution from the paper manufacturing plant leads to higher costs and disruption for fishermen on the river, which implies that there is a negative externality associated with paper production. This means that too many of society's resources are being used to produce paper, since the production process is resulting in costs that are not being accounted for and that are being borne by those who are not involved in the production process.

A Paper Manufacturing Plant Dumps Pollution into the Salmon Arm