Questions: Which of the following could not have caused the increase in demand indicated in Exhibit 17-4? a. new firms located on the river b. consumers wanted to buy more of the good produced by the polluters c. the pollution was discovered to be more hazardous than had previously been supposed d. the cost of pollution abatement equipment rose

Which of the following could not have caused the increase in demand indicated in Exhibit 17-4? a. new firms located on the river b. consumers wanted to buy more of the good produced by the polluters c. the pollution was discovered to be more hazardous than had previously been supposed d. the cost of pollution abatement equipment rose
Transcript text: Which of the following could not have caused the increase in demand indicated in Exhibit 17-4? a. new firms located on the river b. consumers wanted to buy more of the good produced by the polluters c. the pollution was discovered to be more hazardous than had previously been supposed d. the cost of pollution abatement equipment rose
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Solution

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Solution Steps

Step 1: Analyze the graph

The graph shows an increase in demand, shifting the demand curve to the right from D to D'. This means at any given price, the quantity of river pollution demanded is higher.

Step 2: Consider the options

Option (a) implies an increase in demand for pollution as new firms would produce more output and thus more pollution. Option (b) suggests that the polluting firms have seen an increase in product demand, leading them to produce more and pollute more. Option (c) implies that people now find pollution more undesirable, which would decrease the demand for it. Option (d) suggests the cost of reducing pollution has increased, making it more expensive for firms to comply with pollution regulations, thus increasing their demand for the right to pollute.

Step 3: Determine the answer

Options a, b, and d all imply an increase in the demand for pollution. Option c, however, would lead to a decreased demand for pollution, as people would be less willing to accept its negative consequences.

Final Answer

c. the pollution was discovered to be more hazardous than had previously been supposed

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