Question

in order to cut costs, a factory dumps chemical waste into a nearby river instead of disposing of it properly. this is an example of an ______ that leads to market failure. externality private information market power irrationality

Explanation:

An externality occurs when a third - party is affected by an economic transaction. Here, the factory's action (dumping waste) has a negative impact (pollution) on the environment (a third - party, like people using the river, aquatic life etc.), which is a negative externality. Private information refers to information known only to some market participants. Market power is when a firm can influence prices. Irrationality is about non - rational decision - making by individuals. Since the problem is about a cost (pollution) imposed on others (externality), the answer is externality.

Answer:

A. externality