Internalising a positive production externality will cause the supply curve faced by an industry to:
A)shift to the right
B)shift to the left
C)expand
D)remain unchanged

Question

Quizplus · Accepted Answer

When a positive production externality is internalized, the costs of production decrease for the industry. This leads to a decrease in the marginal cost of production, causing the supply curve to shift to the right. As a result, the industry will be able to produce and supply more output at each price level. Therefore, the best choice is A, which suggests that the supply curve faced by an industry will shift to the right.

Internalising a Positive Production Externality Will Cause the Supply Curve