If those who consumed common resources were subject to a tax that was equal to the external costs that they imposed due to the negative externality created,their demand curve:
A)would shift straight down and they would consume less.
B)would shift straight up and they would consume more.
C)would shift straight down and they would consume more.
D)would shift straight up and they would consume less.

Question

Quizplus · Accepted Answer

The tax equal to the external costs would increase the cost of consumption, effectively shifting the demand curve downwards, leading to a decrease in quantity consumed.

If Those Who Consumed Common Resources Were Subject to a Tax