Why is dioxin emission that results from the production of paper a good example of a negative externality
A)Self-interested paper firms are generally unaware of environmental regulations.
B)There are fines for producing too much dioxin.
C)Self-interested paper producers will not consider the full cost of the dioxin pollution they create.
D)Toxic emissions are the only form of an externality.

Question

Quizplus · Accepted Answer

A negative externality occurs when the production or consumption of a good or service imposes costs on a third party who is not involved in the transaction. In the case of dioxin emissions from paper production, self-interested paper producers may not consider the full cost of the pollution they create, including the negative health effects on nearby residents or the impact on the environment. This lack of consideration results in a negative externality, where the cost of the pollution is borne by others outside of the paper production industry.

Why Is Dioxin Emission That Results from the Production of Paper