Which of the Following Statements Is Correct About a Market

question 281

Multiple Choice

Which of the following statements is correct about a market in which pollution is emitted?

• A)Both corrective taxes and pollution permits move the market toward the social optimum.
• B)Corrective taxes move the market toward the social optimum, but pollution permits do not move the market toward the social optimum.
• C)Pollution permits move the market toward the social optimum, but corrective taxes do not move the market toward the social optimum.
• D)Neither corrective taxes nor pollution permits move the market toward the social optimum.

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Definitions:

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource, considering all other factors constant.

Purely Competitive

A market structure characterized by many buyers and sellers, none of whom can influence market prices, with free entry and exit from the market.

Product Price

The amount of money required to purchase a good or service, determined by factors such as cost of production, market demand, and competition.

Imperfectly Competitive

Characterizes markets where individual sellers can influence prices and products, unlike in perfectly competitive markets.