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Question
Refer to the above figure. It represents supply and demand for The Black Ash Steel Companyʹs output. The firmʹs plant belches large quantities of smelly fumes and black ash into the air. Residents in the surrounding area have higher medical bills as a result. If the firm is forced to pay the full social cost of its production, what will occur?
A) Black Ashʹs supply curve will shift from S A to SB.
B) Demand for the firmʹs steel will shift to the left.
C) The companyʹs supply curve will shift from S B to SA.
D) Black Ash will increase its own output to cover the cost increase.
Answer
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