A paper plant produces water pollution during the production process. If the government forces the plant to internalize the negative externality, then the:__________
a) supply curve for paper would shift to the right.
b) demand curve for paper would shift to the right.
c) supply curve for paper would shift to the left.
d) demand curve for paper would shift to the left.

Respuesta :

Answer:

supply curve for paper would shift to the left. 

Explanation:

Negative externality is when the cost of either production or consumption activities to third parties not involved in the activities exceeds its benefit.

If the governmental makes the firm internalize the externality, the cost of production would increase.

If the cost of production increases, the firm would reduce supply in order to reduce costs.

A reduction in supply leads to a leftward shift of the supply curve.

I hope my answer helps you

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