SouthState Chemical Co. produces pine oil cleaners in a process that produces emissions that discolor the paint on nearby houses, although the emissions have been declared nontoxic to humans.
a. Is the price for the cleaner likely to be allocatively efficient? Use a graphic illustration in your answer.
b. If your answer to (a)is no, what is an appropriate government policy to correct the problem?

Question

SouthState Chemical Co. produces pine oil cleaners in a process that produces emissions that discolor the paint on nearby houses, although the emissions have been declared nontoxic to humans. 
a. Is the price for the cleaner likely to be allocatively efficient? Use a graphic illustration in your answer. 
b. If your answer to (a)is no, what is an appropriate government policy to correct the problem?

Quizplus · Accepted Answer

The Answer of SouthState Chemical Co. produces pine oil cleaners in a process that produces emissions that discolor the paint on nearby houses, although the emissions have been declared nontoxic to humans. 
a. Is the price for the cleaner likely to be allocatively efficient? Use a graphic illustration in your answer. 
b. If your answer to (a)is no, what is an appropriate government policy to correct the problem?