asked 189k views
2 votes
Suppose a firm that produces for this market is able to dump toxic chemicals into a river next to its factory, which poisons wildlife and harms the health of nearby residents, who have no business with the company. this scenario can be characterized as , which is an example of .

1 Answer

4 votes
This can be characterized as an externality, which is an example of market failure. In such cases, quantity of output produced is greater than the efficient quantity.
answered
User Hassan Zaheer
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