A paper plant produces water pollution during the production process. If the government forces the plant to internalize the negative externality, then the
A)supply curve for paper would shift to the right.
B)supply curve for paper would shift to the left.
C)demand curve for paper would shift to the right.
D)demand curve for paper would shift to the left.

Question

Quizplus · Accepted Answer

Internalizing the negative externality would increase the cost of production for the plant, resulting in a decrease in supply. This means that the supply curve for paper would shift to the left.

A Paper Plant Produces Water Pollution During the Production Process