When a factory dumps toxic waste into a river and pollutes the river,the costs borne by society in order to clean up the mess is called a(n):
A) externality.
B) internal diseconomy.
C) internal economy.
D) natural monopoly.

Question

Quizplus · Accepted Answer

The situation described is an example of a negative externality, where the costs of the factory's actions are not fully borne by it, but instead are spread throughout society in the form of pollution and the costs of cleanup.

When a Factory Dumps Toxic Waste into a River and Pollutes