If the external cost of an activity is added to the private cost,then the
A) supply curve shifts right.
B) quantity supplied rises.
C) supply curve shifts left.
D) quantity supplied falls.
E) demand curve shifts left.

Question

Quizplus · Accepted Answer

When the external cost of an activity is added to the private cost, the total cost of production increases. This leads to a higher marginal cost for the producers, causing a leftward shift in the supply curve. As a result, the quantity supplied falls. Therefore, the correct choice is (C) - supply curve shifts left.

If the External Cost of an Activity Is Added to the Private