Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It shifts to the left
B
It remains the same
C
It shifts to the right
D
It becomes horizontal
Understanding the Answer
Let's break down why this is correct
Answer
In a graph showing negative externalities, the social cost curve is higher than the private cost curve. This is because negative externalities, like pollution, impose additional costs on society that the producer does not account for in their private costs. For example, if a factory pollutes a river, the private cost only includes the factory's expenses, but the social cost also includes the impact on people’s health and the environment. As a result, the social cost curve shifts upward, reflecting these extra costs. This difference highlights the need for policies to address these external costs and encourage more socially responsible production.
Detailed Explanation
The social cost curve shifts to the right. Other options are incorrect because Some might think the social cost decreases; It may seem like social costs are the same as private costs.
Key Concepts
externalities
Topic
Externality Graphs in Economics
Difficulty
easy level question
Cognitive Level
understand
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