Activities that create water pollution are best associated with:
A) inferior goods.
B) positive externalities.
C) negative externalities.
D) normal goods.

Question

Quizplus · Accepted Answer

Activities that create water pollution, such as industrial discharges and agricultural runoff, have negative externalities because they impose costs on society that are not reflected in the market price of the goods or services produced. These costs may include damage to human health, aquatic ecosystems, and recreational opportunities, as well as increased treatment expenses for drinking water and lost productivity due to illness or absenteeism. Therefore, the market fails to allocate resources efficiently, and government intervention may be necessary to correct this market failure through regulation, taxes or subsidies, or tradable permits.

Activities That Create Water Pollution Are Best Associated With