When farmers raise pigs, there are a number of external costs.In particular, raising pigs generates methane gas.Without government regulation, the equilibrium price and quantity of pigs raised means that:
A)too few pigs will be raised.
B)the price will be less than the marginal social cost.
C)the price will be less than the marginal benefit.
D)the price will be less than the marginal cost to pig farmers.

Question

Quizplus · Accepted Answer

Since raising pigs generates methane gas which is an external cost, the equilibrium price and quantity of pigs raised will not take into account the cost of this external factor. Therefore, the price will be less than the marginal social cost, leading to overconsumption and too many pigs being raised.

When Farmers Raise Pigs, There Are a Number of External