Question

It is the custom for paper mills located alongside the layzee river to discharge waste products into the river. as a result, operators of hydroelectric power-generating plants downstream along the river find that they must clean up the river's water before it flows through their equipment. if the government intervenes and corrects the externality in the situation described above, we would expect:

Answer 1

Answer:

Production in the paper mills to decrease.

Explanation:

In this example, the paper mills located by the river discharge waste products into the river. This means that the hydroelectric power-generating plants have to deal with the cleanup. Intervention from the government would most likely force the paper mills to deal with the waste themselves. This would represent a cost for the mills, and would most likely lead them to decrease their production.

Answer 2

If the government intervenes  and corrects the externality in the situation described above, the expectations are 

the output of the paper mills to increase. The price of paper from the mills to decrease. Production of the hydroelectric power plants to decrease. production in the paper mills to decrease.