Final answer:
The student's question deals with a negative externality caused by improper waste disposal, leading to environmental pollution. This is a market failure typically requiring government intervention to align private costs with social costs to address the environmentally detrimental outcomes of such actions.
Step-by-step explanation:
The student's question entails identifying and analyzing a negative externality caused by the improper disposal of waste. When waste is improperly disposed of, such as being thrown into the sea or onto plants, it creates significant environmental issues. The market responsible for this negative externality is the waste disposal sector, which may include businesses like landfills, recycling centers, or illegal dumping sites if they fail to manage waste properly. The negative externality present in this situation is environmental pollution, which harms ecosystems, human health, and can lead to the degradation of natural resources.
Such negative externalities are an example of market failure because the true cost of the product (in this case, the cost of environmental damage) is not reflected in the market price. This problem may stem from both consumption (demand-side) and production (supply-side) activities, as consumers demand products that may result in waste, and producers may not incorporate the environmental cost of waste disposal into their operational costs.
To manage this, government intervention is often necessary, implementing policies such as taxes, regulations, or pollution permits. These efforts aim to align the private costs borne by firms with the social costs incurred by the broader community, thus addressing the negative externalities and promoting environmental conservation.