An individual firm has little incentive to voluntarily internalize any external costs it was creating because:
A)it would shift its cost curves downward.
B)it would put it at a competitive disadvantage compared to its rivals.
C)it would have to increase output to make up for the added costs.
D)they do not care at all about other people.

Question

An individual firm has little incentive to voluntarily internalize any external costs it was creating because:
A)​it would shift its cost curves downward.
B)​it would put it at a competitive disadvantage compared to its rivals.
C)​it would have to increase output to make up for the added costs.
D)​they do not care at all about other people.

Quizplus · Accepted Answer

If the firm internalizes external costs, it would increase its production costs, which would put it at a competitive disadvantage compared to its rivals who have not internalized these costs. Therefore, the firm has little incentive to do so voluntarily.

An Individual Firm Has Little Incentive to Voluntarily Internalize Any