If there is pollution in producing a product, then the market equilibrium price
A)is too high and equilibrium quantity is too low.
B)and equilibrium quantity are too low.
C)and equilibrium quantity are too high.
D)is too low and equilibrium quantity is too high.

Question

Quizplus · Accepted Answer

When there is pollution, it creates a negative externality, meaning the social cost is higher than the private cost. This results in a market equilibrium price that is too low and an equilibrium quantity that is too high, as the market fails to account for the external costs of pollution.

If There Is Pollution in Producing a Product, Then the Market