Question

If a good that generates negative externalities were priced to take these negative externalities into account, its A. price would decrease, and its output would increase B. price would remain constant and output would increase C. price would increase, and its output woulkd decrease D. price would increase but its outpuit would remain constant

Answer 1

The correct option is C: price would increase, and its output would decrease

Step-by-step explanation:

Many companies that produce goods with negative externalities pay hugely for the negative externalities the consumer tend to face. For example, cigarette companies pay huge taxes because of harmful effect on consumer. If they were to price these goods with the negative externalities taken into account, the price of the good will definitely increase and output reduced.