alleryStart learning →Taking external pollution costs into account results in a price that is:
AHigher up
BLower down
CUnchanged
DDown to zero
Answer & Solution
Correct answer: A. Higher up
1. Internalising a cost moves the market outcome in a predictable direction.
2. Requiring payment for external costs shifts the supply curve up.
3. Taking the additional external costs of pollution into account results in a higher price.
4. It also results in a lower quantity of production and a lower quantity of pollution.
_Source: OpenStax Principles of Microeconomics for AP Courses 2e (CC BY 4.0), Ch 12 'Environmental Protection and Negative Externalities'_
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