In the case of a coal-burning plant that generates pollutants:
A) the firm would consider the cost of this pollution in its production decisions even in the absence of regulation.
B) consumers are faced with prices that reflect the full cost of production.
C) government agencies may seek to limit the emission of pollution through regulation.
D) the people who buy the output of the plant have to pay the costs of pollution abatement.

Question

Quizplus · Accepted Answer

This is because government agencies may seek to limit the emission of pollution through regulation. This means that the government may implement laws or rules that require the company to reduce their emissions to a certain level or face penalties. This is done in order to protect the environment and public health from the harmful effects of pollution. A and B are not necessarily true as some companies may not take into account the cost of pollution in their production decisions and consumers may not be faced with prices that reflect the full cost of production. D is also not necessarily true as the people who buy the output of the plant may not directly pay for the costs of pollution abatement.

In the Case of a Coal-Burning Plant That Generates Pollutants