If firms were required to pay the full social costs of the production of goods, including both private and external costs, other things being equal, which of the following would likely occur?

Question

Quizplus · Accepted Answer

If firms were required to pay the full social costs of production, including external costs, the cost of production would increase. Firms would then be less willing to produce, and therefore there would likely be a decrease in production.

If Firms Were Required to Pay the Full Social Costs