The Government Prefers a Market-Based Approach to Reduce Firms' Emissions

question 176

Multiple Choice

The government prefers a market-based approach to reduce firms' emissions of a toxic gas but wants to make certain that no more than 1,000 cubic yards of the gas are ever emitted in a single day.The most efficient policy under these circumstances is likely to be a system of

• A)per-unit taxes on emissions of the gas.
• B)per-unit taxes on the goods produced by firms that emit the gas.
• C)subsidies to firms that agree not to emit the gas.
• D)sales of permits to emit specified quantities of the gas on specified days.

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Definitions:

Bank

A financial institution that accepts deposits, offers loans, and provides other financial services.

Average Daily Receipts

The average amount of cash flow received by a business per day over a defined period of time.

Collection Delay

The time lag between when a sale is made and when the payment is actually received, affecting cash flow.

Average Amount

The sum of individual amounts divided by the number of amounts, representing a central value or typical amount in a set of data.