When the Government Can Set Emissions Standards for Polluting Industries

question 28

Multiple Choice

When the government can set emissions standards for polluting industries, which of the following statements is correct?

• A)The government should set the emissions standard to zero because pollution is bad for people.
• B)The government should set the emissions standard to achieve the socially optimal level of production which, in general, is not equal to zero.
• C)The government should employ emissions taxes instead because emissions standards cannot generally achieve the social optimum.
• D)The government should not set emissions standards because the market equilibrium will coincide with the social optimum in the absence of intervention.

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