If a steel manufacturer does NOT bear the entire cost of the sulfur dioxide it emits, it will:
A) emit a lower level of sulfur dioxide than is socially efficient.
B) emit a higher level of sulfur dioxide than is socially efficient.
C) emit an acceptable level of sulfur dioxide
D) not emit any sulfur dioxide in an attempt to avoid paying the entire cost.

Question

Quizplus · Accepted Answer

If a steel manufacturer does not bear the entire cost of the sulfur dioxide it emits, it will emit a higher level of sulfur dioxide than is socially efficient. This is because the manufacturer will not have a strong incentive to reduce emissions, resulting in an overuse of resources and negative externalities on society.

If a Steel Manufacturer Does NOT Bear the Entire Cost