If a corporation were forced to absorb the cost of a spillover from the production of a good, this would likely cause the supply curve for the good to
A)shift out.
B)shift to the left.
C)shift to the right.
D)None of the above are correct.

Question

Quizplus · Accepted Answer

If a corporation is forced to absorb the cost of a spillover, it would increase the firm's production cost, causing a decrease in profitability. In response, the firm would produce fewer goods, which would lead to a decrease in the supply of the good. Therefore, the supply curve would shift to the left.

If a Corporation Were Forced to Absorb the Cost of a Spillover