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If a good that generates negative externalities were priced to take these negative externalities into account, then its

Sagot :

Parrainidn

Answer: price will increase and output will decrease

Explanation:

A negative externality refers a negative effect that is incurred by a third party as a result of the production of a certain good e.g pollution associated with the refining of oil.

When this negative externality is included in price e.g. the cost of cleaning up the pollution, the price will have to increase to reflect that. The good will therefore becomes more expensive to produce which would cause the company to produce less of it which means that the output will fall.

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