If a paper manufacturer does NOT bear the entire cost of the dioxin it emits,what will it do
A)It will emit lower levels of dioxin than is socially efficient.
B)It will emit higher levels of dioxin than is socially efficient.
C)It will emit an acceptable level of dioxin.
D)It will not emit any dioxin in an attempt to avoid paying a fine.

Question

Quizplus · Accepted Answer

When the paper manufacturer does not bear the entire cost of the dioxin it emits, it does not have the incentive to reduce its emissions to the socially efficient level. Instead, it will emit higher levels of dioxin than is socially efficient, as it can save on the costs associated with reducing emissions. This is referred to as a negative externality, where the costs of the emissions are not fully borne by the producer but are instead passed on to society as a whole.

If a Paper Manufacturer Does NOT Bear the Entire Cost