After accounting for externalities with a social cost curve, the new equilibrium would be such that equilibrium price is
A)lower than before and equilibrium quantity is higher than before.
B)higher than before and equilibrium quantity is higher than before.
C)lower than before and equilibrium quantity is lower than before.
D)higher than before and equilibrium quantity is lower than before.

Question

Quizplus · Accepted Answer

When externalities are accounted for with a social cost curve, it typically reflects the additional costs to society that were not included in the market cost. This adjustment usually results in a higher equilibrium price (to account for the external costs) and a lower equilibrium quantity (as the higher price reduces demand).

After Accounting for Externalities with a Social Cost Curve, the New