Suppose That at Present There Are No Laws to Restrict

question 99

Multiple Choice

Suppose that at present there are no laws to restrict pollution produced by the widget industry.The market price of a widget is $20.If the government imposes a tax equal in value to the cost of the pollution,under which circumstances would firms continue to produce widgets

• A)if the cost imposed by the pollution is less than $20 per widget produced
• B)if the private cost of producing a widget equals the cost of the pollution generated per widget
• C)if $20 minus the private cost of producing a widget is greater than the cost of the pollution generated per widget
• D)if $20 minus the private cost of producing a widget is less than the cost of the pollution generated per widget

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Definitions:

Useful Life

The estimated period over which a fixed asset is expected to be usable by the company, affecting its depreciation calculation.

Depreciation Percentage

The rate at which a company depreciates an asset, expressed as a percentage of its total value.

Double-Declining-Balance

An accelerated method of depreciation which doubles the usual rate of depreciation of assets, allowing for faster write-offs.

Units-Of-Output

A depreciation method that allocates the cost of an asset over its useful life based on the units it produces, reflecting the asset's wear and tear more accurately.