Question

If a good's production process results in pollution and the government taxes producers to pay for cleanup costs, then :______

a. consumers will purchase more of the good.
b. the price of the good will decrease.
c. supply will decrease.
d. the quantity of the good produced will increase.

Answer 1

c. supply will decrease.

Step-by-step explanation:

If a good's production process results in pollution and the government taxes producers to pay for cleanup costs, then supply will decrease.

Generally, when consumers of a particular product notices that the product has an adverse effect on the environment (pollution) or it is a product that causes environmental degradation, they are most likely to stop demanding or buying such products. Consequently, as the demand for such goods falls or decreases; there would be a fall in the supply of such goods. This is so because the demand for goods and services is directly proportional to the amount of quantity supplied.