Question

Suppose Johnson's Rubber Factory belches black smoke into the air over the city of Bellowsville. If the city of Bellowsville attempts to internalize the external costs associated with the production of rubber with a pollution tax, then we expect: Group of answer choices Johnson's Rubber Factory will not change the amount of rubber supplied at each price. at each price, a smaller quantity of rubber will be supplied by Johnson's Rubber Factory. Johnson's production costs not to change. at each price, a larger quantity of rubber will be supplied Johnson's Rubber Factory.

Answer 1

Answer: at each price, a smaller quantity of rubber will be supplied by Johnson's Rubber Factory

Explanation:

Eexternal costs refers to the cost that's incurred by an economic agent like the individuals or firms based on the economic transaction that they aren't directly involved in. They're the spillovers based on someone else production or consumption activities.

In this case, if the city of Bellowsville wants to internalize the external costs that's associated with the production of rubber with a pollution tax, therefore it should be expected that at each price, a smaller quantity of rubber will be supplied by Johnson's Rubber Factory.