The Most Significant Disadvantage of Command and Control Methods in the Environmental

question 13

Multiple Choice

The most significant disadvantage of command and control methods in the environmental area is that they

• A)ignore transactions costs.
• B)do not allow firms to find other, cheaper ways to reduce pollution.
• C)allow firms to seek private remedies.
• D)are not effective.
• E)provide incentives for firm free-riding.

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Definitions:

Sales Units

The total number of units of a product sold during a specific period.

Break-Even Point

The production level or sales volume at which total revenues equal total costs, resulting in neither profit nor loss.

Margin of Safety

The difference between actual sales and the break-even point, indicating the level of risk in not covering fixed costs.

Composite Units

A measure used in costing to represent a bundle or mix of goods or services treated as a single unit.