When the Government Uses a Command-And-Control Policy Tosolve an Externality

question 102

Multiple Choice

When the government uses a command-and-control policy tosolve an externality, it:

• A)usually involves taxing the consumption of a commodity.
• B)relies on the Coase theorem to structure the policy.
• C)creates policies that directly regulate behavior.(True Answer )Correct
• D)is usually the most effective policy option available.

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Definitions:

Standard Cost

Predetermined or estimated costs used for cost control and decision making in manufacturing.

Actual Prices

The real prices at which goods and services are sold, differing from list or nominal prices.

Labor Rate Variance

The difference between the actual cost of labor and the budgeted or standard cost, based on the labor rate.

Actual Rate

A term that can refer to the real, observed interest rate, exchange rate, or other financial variable in contrast to a theoretical or estimated rate.