Suppose Johnson's Rubber Factory belches black smoke into the air over the city of Bellowsville. If the city of Bellowsville attempts to internalize the external costs associated with the production of rubber with a pollution tax, we can expect

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Quizplus · Accepted Answer

A pollution tax would increase the cost of production for Johnson's Rubber Factory, which would likely result in an increase in the price of rubber to consumers. This increase in price would decrease the quantity of rubber demanded, as consumers would seek out cheaper alternatives or reduce their consumption altogether. Therefore, option B is the best choice.

Suppose Johnson's Rubber Factory Belches Black Smoke into the Air