The trains of the Transcontinental Railway Company,when shipping goods,sometimes emit sparks that start fires along the tracks and damage the property of others.If Transcontinental does not pay for the damage it causes,what has occurred?
A) Positive externality.
B) Demand-side market failure.
C) Supply-side market failure.
D) All of these.

Question

Quizplus · Accepted Answer

The scenario described is an example of supply-side market failure, as the Transcontinental Railway Company is not accounting for the full cost of their production, including the damage caused by their emissions. This leads to an inefficient allocation of resources. Positive externality and demand-side market failure do not accurately describe this situation.

The Trains of the Transcontinental Railway Company,when Shipping Goods,sometimes Emit