A Subsidy to Firms Intended to Reduce Pollution in an Industry

question 87

Multiple Choice

A subsidy to firms intended to reduce pollution in an industry would

• A)shift the LRAC curve upward.
• B)have the same impact on the firm as a tax.
• C)likely drive some existing firms from the industry.
• D)likely have the paradoxical effect of increasing pollution in the industry in the long run.

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Definitions:

Idiosyncrasy Credit

A concept in social psychology that allows individuals to deviate from group norms without sanction if they have previously contributed positively to the group.

Legitimate Power

This refers to the authority someone has due to their position or role within a formal organizational setting.

Accumulate

To gather or pile up something gradually as time passes, often leading to a large quantity.

Exert Influence

The act of using one's power, authority, or personal appeal to affect or change someone's beliefs, attitudes, or actions.