Question

The dry cleaning business can be characterized as a perfectly competitive industry because the costs of entry are low and there are many dry cleaning shops. Dry cleaners, however, use a toxic solvent called perchloroethylene, which can contaminate soil and threaten water supplies.

1. If the disposal of this pollutant is unregulated, then which of the following statements about the dry cleaning market are correct?
A.There will be too much dry cleaning at a price greater than the true cost.
B. There will be an efficient quantity of dry cleaning at a price that reflects the true cost.
C. There will be too little dry cleaning at a price less than the true cost.
D. There will be too much dry cleaning at a price less than the true cost. BackNext

Answer 1

The correct answer is option (d)

Step-by-step explanation:

From the given question which is described as follows:if the disposal of this pollutant is unregulated, then which of the following statements about the dry cleaning market are correct

The following statements are true if the negative externality or external has not been considered which would mean there is an overproduction at a price less or lesser than the true cost. This is to say that, the marginal social cost is greater than marginal private costs

Note: Kindly find an attached diagram that is apart of a solution to this question