With Marketable Permits to Pollute, Efficiency Can Be Obtained If

question 46

Multiple Choice

With marketable permits to pollute, efficiency can be obtained if

• A) the regulator knows the marginal cost schedule of every firm.
• B) firms with low marginal costs of eliminating pollution sell their permits.
• C) firms with low marginal costs of eliminating pollution buy up more permits.
• D) only one firm gets the permits to pollute.

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Definitions:

Common Fixed Expense

Costs that do not vary with production volume, and are shared among different products or business segments.

Contribution Margin Ratio

The portion of sales revenue left over after variable expenses have been deducted, expressed as a percentage of sales revenue.

Variable Expenses

Costs that vary in direct proportion to changes in an activity level or volume, such as raw materials and direct labor.

Sales

Sales refer to the revenue generated from the exchange of goods or services for money or other assets between a seller and a buyer.