The Reason Why Cleanup Costs Are Lower for a Taxes

question 213

Multiple Choice

The reason why cleanup costs are lower for a taxes approach than for a direct controls approach is that

• A)all firms reduce pollution equally and fairly.
• B)firms that are able to clean up at lowest cost do so; others don't.
• C)large polluters clean up the most, which is always lowest cost.
• D)small polluters clean up the most, which is generally the cheapest.

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Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, often with dividends that are paid out before those to common shareholders.

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity, which is used to finance its overall operations and growth.

Target Capital Structure

The optimal mix of debt, equity, and other securities a company aims to hold, balancing risk and return to maximise shareholder value.

Flotation Costs

Financial outlays a business faces when it issues new stocks, covering charges for underwriting, legal services, and registration documentation.