Suppose the production of widgets generates negative externalities but no positive externalities.If widget producers suddenly had to pay the true marginal cost of their product for every unit they produced,including all externalities,producers would

Question

Quizplus · Accepted Answer

If widget producers had to pay the true marginal cost of their product, which includes negative externalities, it would increase the cost of production. This increase in cost would cause producers to reduce their output, resulting in less production than the current level. Widget producers would have an incentive to reduce pollution output to lower costs and continue with production. Therefore, the correct answer is C.

Suppose the Production of Widgets Generates Negative Externalities but No