Suppose That a Newer Way to Produce a Good Is

question 135

Multiple Choice

Suppose that a newer way to produce a good is discovered,which reduces production costs for the good.This will cause

• A)no change in the supply curve,only a change in price.
• B)a decrease in supply (a leftward shift of the supply curve).
• C)a movement up the supply curve.
• D)a movement down the supply curve.
• E)an increase in supply (a rightward shift of the supply curve).

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Definitions:

Internalize Externalities

The process by which a firm takes into account the external costs or benefits of its activities, typically by incorporating them into its pricing structure.

Negative Externalities

Costs suffered by a third party as a result of an economic transaction, such as pollution caused by industry, which are not reflected in the market prices.

Positive Externalities

Benefits that result from a transaction or activity and affect others not directly involved in the transaction or activity.

Marginal Social Cost

The total cost society bears for the production of an additional unit of a product, including both private and external costs.