If a good that involves external costs is priced to take these costs into account,then its price will likely:
A)fall,and output will likely rise.
B)rise,and output will likely fall.
C)not change,but output will likely fall.
D)rise,but output will likely stay the same.

Question

Quizplus · Accepted Answer

By pricing the good to take external costs into account, the marginal cost of production will increase, leading to a higher price for the good. This will result in a decrease in demand and a decrease in output. Therefore, the price will rise and output will likely fall.

If a Good That Involves External Costs Is Priced to Take