The Race to the Bottom Scenario of Global Environmental Degradation

question 22

Multiple Choice

The race to the bottom scenario of global environmental degradation is explained roughly like this:

• A) Companies seek to reduce their costs of operations on plant and equipment design and this results in higher levels of pollution.
• B) Companies seek the lowest market prices on products in order to gain market share, resulting in inferior goods and increased waste and pollution.
• C) Profit-seeking multinational companies shift their production from countries with strong environmental standards to countries with weak standards, thus reducing their costs and increasing their profits.
• D) Companies seek to influence environmental legislation standards are set to the lowest possible standards in the USA in order to maximize profits.

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Definitions:

Risk-neutral

A characteristic of individuals or entities that exhibit indifference between choices with differing levels of risk, focusing solely on expected outcomes.

Expected Utility

A strategy in economics and game theory where individuals choose the option with the highest expected benefit, taking into account all future outcomes.

Risk-neutral

Refers to a mindset or condition where an individual or entity is indifferent to risk when making investment decisions, focusing instead on the potential returns without giving additional weight to the possibility of loss.

Expected Utility

a theory in economics that quantifies how choices are made when outcomes are uncertain, aiming to maximize the expected utility rather than merely the expected monetary value.