Which of the Following Statements Is Not Correct

question 78

Multiple Choice

Which of the following statements is not correct?

• A)Tradable pollution permits have an advantage over corrective taxes if the government is uncertain as to the optimal size of the tax necessary to reduce pollution to a specific level.
• B)Both corrective taxes and tradable pollution permits provide market-based incentives for firms to reduce pollution.
• C)Corrective taxes set the maximum quantity of pollution, whereas tradable pollution permits fix the price of pollution.
• D)Both corrective taxes and tradable pollution permits reduce the cost of environmental protection and thus should increase the public's demand for a clean environment.

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Definitions:

Net Operating Income

The profit generated from a business's operations after subtracting operating expenses from operating revenues.

Variable Costing

A method of costing that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of a unit of product.

Absorption Costing

An accounting method that includes all manufacturing costs - direct labor, direct materials, and overhead - in the cost of a product.

Net Operating Income

A company's revenue minus its operating expenses, not including taxes and interest.