Chapter 14, Problem 28E

Environmental costs are those costs incurred because poor environmental quality exists or may exist. As with quality costs, environmental costs can be placed into one of four categories. One of these categories is external failure costs. Which of the following describes one of the two external failure cost categories?

1. a. Costs incurred to detect pollution caused by the firm
2. b. Costs incurred to prevent pollution from contaminating the environment after pollution has been produced
3. c. Pollution costs caused by the firm but paid for by society
4. d. Costs incurred to prevent the production of pollution