If a Polluting Producer Is Forced to Pay a Pollution

question 195

Multiple Choice

If a polluting producer is forced to pay a pollution charge,what is the effect on the supply and demand curves for the product?

• A) The quantity supplied along the firm's supply curve increases.
• B) The firm's demand curve shifts leftward.
• C) The firm's supply curve shifts rightward.
• D) The firm's supply curve shifts leftward.
• E) Both the supply curve and the demand curve shift leftward.

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Definitions:

Total Variable Costs

The sum of expenses that vary directly with the level of production or output, including costs for materials and labor.

Output

The amount of goods or services produced by a business, industry, or economy.

Supply Curve

A graphical representation showing the relationship between the price of a good and the amount of it that producers are willing to supply at each price level.

Total Variable Costs

The sum of all costs that vary directly with the level of production or output in the short term.