Suppose that a company runs coal refining business in North eastern part of China. Its factory emits

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Question:

Suppose that a company runs coal refining business in North eastern part of China. Its factory emits poisonous gases into the air, leading to a decline in air quality in the surrounding area. If the firm does not have to pay for the emission of pollution, for its output, the market equilibrium price and the market equilibrium quantity will respectively be

Select one:

a. efficient; inefficiently low.

b. inefficiently high; inefficiently high.

c. inefficiently high; inefficiently low.

d. inefficiently low; inefficiently high.