If a production process causes pollution, then the social cost curve will be placed:
A)below the market supply curve.
B)on top of the original market supply curve.
C)above the market supply curve.
D)at zero.

Question

Quizplus · Accepted Answer

The social cost curve includes both the private costs incurred by firms and the external costs to society, such as pollution. Therefore, it is placed above the market supply curve, which only accounts for private costs.

If a Production Process Causes Pollution, Then the Social Cost