Question

When economists adopt a market-oriented strategy to deal with pollution?

Answer 1

Answer: They raise the cost of pollution to discourage it.

Explanation:

Under the market oriented approach the forces of demand and supply determine the optimum quantity of a good and the price at which the good must be traded. The price gives us information on the relative scarcity of the good. When pollution is free, businesses will produce a large amount of it. However, when market oriented approach is used, the demand for pollution coming from the society as a whole interacts with the supply of pollution created by the various business and consumption activities. The intersection of this determines the price for pollution and the optimum quantity of pollution. Thus, pollution is not free anymore, it has a cost which is the price of pollution. Thus, the market oriented approach increases the cost of pollution to reduce the level of pollution.