Use the Following to Answer Question

question 27

Multiple Choice

Use the following to answer question:
Figure: Efficiency and Pollution
-(Figure: Efficiency and Pollution) Use Figure: Efficiency and Pollution.Assume that firms are the only beneficiaries of pollution and that costs are borne solely by others in the society.If the government imposed an environmental standard that did NOT allow the quantity of pollution to exceed 30 tons,there would be:

• A)a socially optimal quantity of pollution.
• B)too little pollution because its marginal social benefit would exceed its marginal social cost.
• C)too much pollution because its marginal social cost would exceed its marginal social benefit.
• D)too much pollution because any pollution is too much from an economist's perspective.

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Definitions:

Capital Structure

The particular combination of debt and equity that a company uses to finance its overall operations and growth.

Coupon Rate

The annual interest rate paid on a bond, expressed as a percentage of the face value.

Market Price

The current price at which an asset or service is bought or sold in the marketplace.

Capital Accounts

Financial records showing the ownership interests and funds contributed or withdrawn by owners or investors in a company.