Assume that the marginal cost of producing steel does not include the cost of the damage to the environment as a result of producing steel. By producing where P=MC, the firm will be producing:

Question

Quizplus · Accepted Answer

When the marginal cost does not include environmental damage, the firm underestimates the true cost of production, leading to overproduction beyond the efficient level where social marginal cost equals price.

Assume That the Marginal Cost of Producing Steel Does Not