If firms have to account for external costs in production, then they will produce an output level that is ________ the efficient level.
A) at
B) below
C) above
D) either above or below

Question

Quizplus · Accepted Answer

When firms have to account for external costs in production, they adjust their output to reflect the true cost of production, including the externalities. This adjustment leads to a production level that aligns with the efficient level, as it incorporates all social costs and benefits.

If Firms Have to Account for External Costs in Production