If companies who internalized an externality want to supply less at any given price compared to the original market supply,it must be a:
A)positive externality.
B)negative externality.
C)network externality.
D)social externality.

Question

Quizplus · Accepted Answer

When a company internalizes a negative externality, it means they are taking into account the cost of the externality and are reducing their production accordingly. This would result in a decrease in the market supply compared to the original supply, as the other companies not internalizing the externality would continue to produce at the same level. Hence, the correct answer is option B, negative externality.

If Companies Who Internalized an Externality Want to Supply Less