Which of the Following Criteria Should Be Used to Evaluate

question 254

Multiple Choice

Which of the following criteria should be used to evaluate if government intervention in a market for the purpose of environmental protection is justified?

• A)Does the intervention program reduce pollution to zero using the least costly method?
• B)Is the intervention program economically efficient?
• C)Does the intervention program make the amount of economic surplus as large as possible?
• D)Is the damage to the environment from government intervention as small as possible?

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Definitions:

Accelerated Depreciation

A method of depreciation in which an asset loses book value at a faster rate than the traditional straight-line method over its useful life.

Useful Life

The expected time period over which an asset is useful to the owner.

Double-declining-balance

An accelerated method of depreciation which double the rate of normal depreciation, reducing the value of assets more quickly.

Depreciation Expense

The yearly allocation of the cost of an asset over its useful life, reflecting the asset's usage and wear and tear over time.