If a good that involves external costs is priced to take these costs into account, then its price will:
A) fall, and output will go up.
B) rise, and output will fall.
C) not change, but output will fall.
D) rise, but output will stay the same.

Question

Quizplus · Accepted Answer

When a good that involves external costs is priced to take these costs into account, its price will rise, and output will fall. This is because the price increase will discourage consumers from purchasing the good, and producers will respond by reducing output.

If a Good That Involves External Costs Is Priced to Take