When the production of a good generates external costs, the producing ﬁrm's supply curve will be
A) below (to the right of) the total-cost supply curve.
B) above (to the left of) the total-cost supply curve.
C) vertical.
D) horizontal.

Question

Quizplus · Accepted Answer

When a firm generates external costs, it does not account for these costs in its supply curve, leading to a supply curve that is below (to the right of) the total-cost supply curve, which includes external costs.

When the Production of a Good Generates External Costs, the Producing