Suppose That a Steel Factory Emits a Certain Amount of Air

question 299

Multiple Choice

Suppose that a steel factory emits a certain amount of air pollution, which constitutes a negative externality. If the market does not internalize the externality,

• 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 quantity will not be the socially optimal quantity.
• D)producers will produce less steel than they otherwise would if the externality were internalized.

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