The production of paper is a chemical-intensive process that generates dioxin. Dioxin is a negative externality associated with the paper industry because:
A) the paper industry does not know that dioxin is a spillover
B) the paper industry often does not know what the regulations for dioxin are
C) self-interested paper producers have no incentive to incorporate the costs of dioxin pollution into their output decisions
D) corporations are only interested in short-term profits

Question

Quizplus · Accepted Answer

Dioxin is a negative externality associated with the paper industry because the self-interested paper producers have no incentive to incorporate the costs of dioxin pollution into their output decisions. This means that they do not consider the costs of the pollution, such as the health and environmental impacts, when making their production decisions. As a result, they may choose to pollute more than is socially optimal, leading to negative impacts on society.

The Production of Paper Is a Chemical-Intensive Process That Generates