When both internal and external costs for using a scarce resource are included, then there is

Question

Quizplus · Accepted Answer

When both internal (private) and external (social) costs are included in the production of a good that requires a scarce resource, the price of the good will increase to reflect the true cost. This is because external costs, such as environmental damage or depletion of the resource, are often not reflected in the cost of production and are instead borne by society as a whole. Including these costs in the price creates an incentive for producers to use the resource more efficiently and reduces the negative impact on society. Therefore, the correct answer is C, an increase in the price of the good.

When Both Internal and External Costs for Using a Scarce