Firms that are able to push part of their costs onto society by polluting will produce more output than society desires.

Question

Quizplus · Accepted Answer

When firms are allowed to pollute without bearing the full cost of their actions, they are effectively shifting those costs onto society. As a result, firms may produce more output than what would be optimal from a social perspective, since they are not factoring in the negative externalities of their pollution. This can lead to inefficiencies, market failures, and negative consequences for the environment and public health.

Firms That Are Able to Push Part of Their Costs