-According to the above figure, if steel mills are charged an effluent fee in order to bear the cost of pollution, what happens to the equilibrium price and equilibrium quantity? A) They are unchanged. B) They change from P₁ and Q₁ to P₂ and Q₂. C) They change from P₂ and Q₂ to P₁ and Q₁. D) The equilibrium price increases from P₁ and P₂, but the equilibrium quantity is unchanged.

Question

Quizplus · Accepted Answer

Charging an effluent fee increases production costs, shifting the supply curve left, leading to a higher equilibrium price (P2) and lower equilibrium quantity (Q2).

-According to the Above Figure, If Steel Mills Are Charged