External Cost
Notes:
- A cheaper way of a company to get rid if their waste would be dumping it in a stream for a lower cost.
- Cost of pollution clean up is not relevant to these companies.
- Negative pollution effects - external costs that are passed on to society and the government.
- A steel companies supply curve is related to the product demand curve.
- The intersection of the two curves is the quantity.
- Unfortunately, it doesn't show the enternal cost caused by pollution.
- The social cost + supply curve shows that steel should be produced at a higher price, and less steel should be produced.
- A way that the government can help is by taxing the company for pollutiong the river.
- So the tax money can help with funding for cleaning the river.