Figure 9.3:
-In Figure 9.3,if pollution costs are external,the rate of output will be:

Question

Figure 9.3:   
-In Figure 9.3,if pollution costs are external,the rate of output will be:

Quizplus · Accepted Answer

When pollution costs are external, firms do not bear the cost of pollution, leading them to produce more than they would if they had to internalize these costs. Therefore, the rate of output will be at the point where their private costs intersect with the demand, which is typically higher than the socially optimal output.