If a Product That Generates a Negative Externality Is Priced

Multiple Choice

If a product that generates a negative externality is priced so that the polluters bear the cost of the externality, the price of the product will likely:

A) fall, and output will likely rise.
B) rise, and output will likely fall.
C) not change, but output will likely fall.
D) rise, but output will likely stay the same.