If a good that generates negative externalities were priced to take these negative externalities into account, its

Question

BlackTom AI · Accepted Answer

Contextualizing the question: when a good with negative externalities is priced to internalize those externalities, we adjust the market so that the social costs align with private costs.
Option A: 'price would decrease, and its output would increase.' This goes against the standard effect of internalizing externalities. If negative externalities are priced in, costs to producers rise, typically leading to a higher price rather than a lower one, and output tends to fall due to reduced demand or higher marginal cost.
Option B: 'price would remain constant and output would increase.' Keeping price constant ignores the added social cost and does not reflect the economic mechanism of internalization. The presence of a tax or price on the externality would alter costs and usually compress output, not increase it.
Option C: 'price increase but output remains constant.' While the price part is plausible, the assumption that output remains constant ignores the normal downward pressure on quantity when price rises and external costs are internalized. In most models, higher marginal cost or lower net benefit reduces quantity.
Option D: 'price would increase, and its output would decrease.' This aligns with the standard outcome of internalizing negative externalities: the social cost is reflected in the market, producers face higher costs or taxes, prices rise, and the quantity produced (output) falls as some potential production is no longer socially optimal at the higher price.
Thus, the combination of a higher price and a reduced output best reflects the internalization of negative externalities in a market for a good.

If a good that generates negative externalities were priced to take these negative externalities into account, its

查看解析

登录即可查看完整答案

类似问题

How do negative externalities affect property rights and economic efficiency?

Legislation limiting specific activities is the most direct method of addressing which market situation?

Which of the following is a policy approach to negative externalities?

Pigovian taxes and direct controls are two government solutions for which market situation?

Which of the following are solutions that governments use to counter overproduction caused by negative externalities?

When production or consumption of a product causes negative effects on third parties, we say that

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单