If a producer must pay the cost of his or her pollution because property rights have been assigned,then
A) pollution will be completely eliminated.
B) the supply curve will shift rightward as the new costs are added.
C) the supply curve will shift leftward as the new costs are added.
D) consumers will now consume more of the good because the external costs are reduced.
E) there is no longer any marginal benefit from the good or service being produced.

Question

Quizplus · Accepted Answer

When producers have to pay for the cost of their pollution, the overall cost of production will increase. This will lead to a decrease in supply, causing the supply curve to shift leftward. As a result, the equilibrium price will rise, and the quantity demanded will decrease. Therefore, assigning property rights for pollution can help to reduce pollution levels, but it may also lead to higher prices for goods and services.

If a Producer Must Pay the Cost of His or Her