If there is pollution in producing a product, then the market ...

[awywial]

If there is pollution in producing a product, then the market equilibrium price is too high and equilibrium quantity is too low.
 
  Indicate whether the statement is true or false

Question 2

Explain the conditions that are met when a consumer has found the best affordable combination of goods to buy. (Use the terms budget line, marginal rate of substitution, and relative price in your explanation.)
 
  What will be an ideal response?

[jliusyl]

Answer to Question 1

FALSE

Answer to Question 2

At the optimal consumption choice, the consumer's consumption bundle is
1) on the budget line,
2) on the highest attainable indifference curve,
3) such that the slope of the budget line, which is the relative price of the two goods, equals the slope of the indifference curve, which is the MRS.