Question

Dioxin emission that results from the production of paper is a good example of a negative externality because a. self-interested paper producers will not consider the full cost of the dioxin pollution they create. b. self-interested paper firms are generally unaware of environmental regulations. c. toxic emissions cause firms to produce less than the socially optimal amount of paper. d. there are fines for producing too much dioxin.

Answer 1

a. self-interested paper producers will not consider the full cost of the dioxin pollution they create.

Step-by-step explanation:

Externality basically causes the market to produce a large amount or little amount of goods and service, thereby causing an inefficient distribution or allocation of resources.

Therefore, when the manufacturing or consumption of a particular product by the consumers leads to an additional cost for a third party, it is known as negative externality.

Hence, Dioxin emission that results from the production of paper is a good example of a negative externality because self-interested paper producers will not consider the full cost of the dioxin pollution they create.