When farmers raise hogs, there are a number of external costs. In particular, hogs generate methane gas. Without government regulation, the equilibrium price and quantity of pigs raised means that:
A) too few hogs will be raised.
B) the price will be less than the marginal social cost.
C) the price will be less than the marginal benefit.
D) the price will be less than the marginal cost to hog farmers.

Question

Quizplus · Accepted Answer

Without regulation, the price reflects only private costs, not external costs like methane emissions, making it less than the marginal social cost.

When Farmers Raise Hogs, There Are a Number of External