Suppose That a Steel Factory Emits a Certain Amount of Air

question 153

Multiple Choice

Suppose that a steel factory emits a certain amount of air pollution.If this market is NOT required to internalize this externality,what will happen

• A)The supply curve would adequately reflect the marginal social cost of production.
• B)Consumers will be required to pay a higher price for steel than they would have if the externality were internalized.
• C)The market equilibrium would not be the socially optimal quantity.
• D)Producers will produce less steel than they otherwise would have if the externality were internalized.

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