alleryStart learning →Firms may fail to take social costs like pollution into their planning if they do not have to:
AImport any inputs
BPay these costs
CReport their profits
DHire any workers
Answer & Solution
Correct answer: B. Pay these costs
1. A cost that is not paid does not enter a firm's calculation.
2. Firms may fail to take certain social costs, like pollution, into their planning.
3. That happens if they do not need to pay these costs.
4. Making them pay brings the cost into the firm's decision.
_Source: OpenStax Principles of Microeconomics for AP Courses 2e (CC BY 4.0), Ch 12 'Environmental Protection and Negative Externalities'_
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