Some Politicians Rally Against Using the Market to Reduce Pollution

question 118

Multiple Choice

Some politicians rally against using the market to reduce pollution because

• A)pollution charges and tradable permits allow firms to pollute as long as they can pay for it.
• B)polluting firms do not care about the environment, so something must be done.
• C)government-run industries have been better at controlling their pollution costs when compared to privately run firms
• D)pollution charges and tradable permits do not penalize polluting firms.

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Definitions:

Upward Sloping

A term often used to describe a line on a graph that shows an increase in a variable as another variable increases, indicative of a direct relationship.

Positively Related

A term describing the relationship between two variables where they move in the same direction; when one increases, the other also increases, and vice versa.

Omitted Variable Bias

Omitted Variable Bias occurs in statistical models when a relevant variable is left out of the model, potentially leading to incorrect conclusions about the relationship between the variables of interest.

Broken Window Fallacy

The misconception that destruction and the subsequent spending to repair the damage stimulate economic growth.