It Is the Custom for Paper Mills Located Alongside the Layzee

question 186

Multiple Choice

It is the custom for paper mills located alongside the Layzee River to discharge waste products into the river. As a result, operators of hydroelectric power-generating plants downstream along the river find that they must clean up the river's water before it flows through their equipment.If the government intervenes and corrects the externality in the situation described, we would expect

• A)the supply of the output from the hydroelectric power plants to decrease.
• B)the supply of the output from the hydroelectric power plants to increase.
• C)the demand for the output from the hydroelectric power plants to decrease.
• D)the demand for the output from the hydroelectric power plants to increase.

---

Definitions:

Richest 1%

The segment of the population that holds a disproportionately large amount of wealth compared to other sectors, often used in discussions on income disparity.

Poverty Line

The minimum level of income deemed necessary to achieve an adequate standard of living in a specific geographic area.

Unemployment Rate

Number of unemployed divided by the labor force.

Property Income

Income received by owners of property for the use of their property, such as rent.