Given That Different Firms Typically Have Different Costs of Pollution

question 72

Multiple Choice

Given that different firms typically have different costs of pollution reduction,

• A)tradable pollution permits will help to reduce the total costs of pollution abatement.
• B)tradable pollution permits will help to reduce the marginal costs of pollution.
• C)it is clear that only a moral solution can actually achieve pollution reduction.
• D)there is a role for government to establish absolute limits on pollution.
• E)the optimal emissions tax is thus easier to compute.

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Definitions:

Aggregate Supply

The total supply of goods and services that firms in an economy plan on selling during a specific time period, at given price levels.

Natural Rate

The long-term unemployment rate around which the labor market is in equilibrium, unaffected by short-term fluctuations.

Unemployment

The condition of being without a job while actively looking for employment and being willing to work.

Potential GDP

An estimate of the maximum output an economy can produce when it is most efficiently utilizing all available resources.