Negative Externalities

What is the equilibrium price and quantity of plastic bags in the market without considering external costs?

• Price: 2 cents, Quantity: 3.5 million bags

• Price: 3.5 cents, Quantity: 1.8 million bags

• Price: 1 cent, Quantity: 1 million bags

• Price: 4 cents, Quantity: 5 million bags

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What does a "negative externality" in the context of plastic bags represent?

• A benefit to society that is not reflected in the market price.

• A cost to society and the environment that is not factored into the market price.

• A cost to producers that is not covered by the market price.

• A benefit to consumers that is not fully realized.

If the negative externality of plastic bags is 2 cents per bag, how does the "Supplier + Society Cost" curve relate to the original supply curve?

• The "Supplier + Society Cost" curve is the original supply curve shifted downwards by 2 cents.

• The "Supplier + Society Cost" curve is the original supply curve shifted upwards by 2 cents.

• The "Supplier + Society Cost" curve is identical to the original supply curve.

• The "Supplier + Society Cost" curve is rotated relative to the original supply curve.

Considering a negative externality of 2 cents per plastic bag, what is the socially optimal quantity and price for plastic bags?

• Quantity: 3.5 million bags, Price: 2 cents

• Quantity: 1.8 million bags, Price: 3.5 cents

• Quantity: 2.5 million bags, Price: 3 cents

• Quantity: 4 million bags, Price: 2.5 cents