Suppose That Water Pollution Creates a Negative Production Externality on a Local

question 176

Multiple Choice

Suppose that water pollution creates a negative production externality on a local fishing firm. This means:

• A) the fishing firm will catch as less fish than before at the same cost
• B) it will be socially optimal for the water pollution to be eliminated
• C) it will be socially optimal to do nothing about the water pollution
• D) the fishing firm will catch more fish than before at the same cost