A fertilizer plant emits a very foul odour during the production process.If the government forces the plant to internalize this negative externality,what would result

Question

Quizplus · Accepted Answer

When the government forces the fertilizer plant to internalize the negative externality, the cost of production for the plant increases due to the cost of managing and reducing odour emissions. This increase in cost will lead to a decrease in the supply of fertilizer as it becomes less profitable for the plant to produce. As a result, the supply curve for fertilizer would shift to the left (up). The demand for fertilizer would remain unchanged. Thus, answer B is the correct choice.

A Fertilizer Plant Emits a Very Foul Odour During the Production