During the Production Process Ajax Corporation Releases Pollution into the Air

question 161

Multiple Choice

During the production process Ajax Corporation releases pollution into the air. Ajax Corporation operates in a monopolistic competitive industry. Which of the following statements addresses the pollution situation?

• A) Ajax is taking advantage of asymmetric information.
• B) This is an example of a market failure and is a reason for the government to regulate the industry.
• C) The quality of the product could be improved if the amount of pollution can be reduced.
• D) This is known as the lemons problem.

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Definitions:

Freedom

The power or right to act, speak, or think as one wants without hindrance or restraint.

Collective Agreement

A written contract negotiated between an employer and a union representing the employees, outlining terms and conditions of employment, wages, and workplace policies.

Legal Authority

The lawful right given to an entity or individual to make decisions, enforce laws, or administer justice.

Union

An organization with the legal authority to represent workers, negotiate the terms and conditions of employment with the employer, and administer the collective agreement.