Question

"Full-Cost Pricing" is one of the principles of sustainability described in your text. When all of...

"Full-Cost Pricing" is one of the principles of sustainability described in your text. When all of the environmental costs of a product or service are not included in the price, environmental problems will result.

Identify and describe an environmental problem that is caused because an industry does not follow full-cost pricing. (2 points)

What could be done to make the industry include the external cost in the price of their product (2 points)

Homework Answers

Answer #1

The pollution problem from chemical industrial production and mining production which creates lot of air pollution through generating dust and chemical waste. These dusts and chemical waste creates the health hazard among the people. As here full cost pricing not included they generating more and more pollution. If we apply full cost pricing in mining there is possibility that less pollution will be created with more superior technology.

The mining industry and chemical industry can take environmental damage in their cost of production. The cost of production could be summation of private cost plus social cost. Let suppose to produce 100 metric ton coal there is a cost of 10000 (production cost) plus 3000(environmental cost). Then if we apply the pricing for the cost of 13000 then this problem can be internalised.

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