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Question
When an external cost exists that is NOT taken into account in the production of a product,
A) the level of output is too low, and the supply curve should shift to the right to account for the externality.
B) the level of output is optimal, and there should be no change in the supply curve.
C) the price of the product is too high, and production should be expanded to lower the price.
D) the level of output is too high, and the supply curve should shift to the left to account for the externality.
Answer
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