Consider the case of a power plant that, in the process of
generating electricity, it also emits noxious pollutants. It has
been argued that this situation represents a market failure.
a. Briefly explain, using a graph, what are the economic
foundations of this argument?
b. Using the graph in (a) show what are the economic
implications of this case
c. What economic mechanism would you suggest to correct for
this market failure?
d. In general, why market forces, do not...