As a General Rule, If Pollution Costs Are External, Firms

question 9

Multiple Choice

As a general rule, if pollution costs are external, firms will produce

• A) too little of a polluting good.
• B) too much of a polluting good.
• C) an optimal amount of a polluting good.
• D) cannot be determined without additional information.

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Definitions:

Merit Rating

A system used to evaluate the performance, abilities, and skills of employees or organizations, often influencing rewards, promotions, or premiums.

FICA Tax

A United States federal payroll tax that funds Social Security and Medicare, contributions are made by both employees and employers.

Social Security

A government system that offers financial assistance to people in the form of retirement benefits, disability income, and other payments.

Medicare

A federal health insurance program in the United States for people aged 65 and over, as well as for some younger people with disabilities.