Relating to the Economics in Practice on page 329: By not factoring in the external costs on society resulting from an environmental disaster caused by a specific firm, the firm will most likely ________ its product, and at equilibrium, the marginal social costs of production will be ________ the price.

Question

Quizplus · Accepted Answer

By not factoring in the external costs on society, the firm will not fully bear the costs of its production, leading it to overproduce its product. At equilibrium, the marginal social costs of production, which includes the external costs, will be greater than the price, indicating overproduction. Therefore, the correct choice is B.

Relating to the Economics in Practice on Page 329: by Not