When Society Requires That Firms Reduce Pollution, What Happens

question 72

Multiple Choice

When society requires that firms reduce pollution, what happens?

• A)There is a tradeoff because of reduced incomes to the firms' owners, workers, and customers.
• B)There is no tradeoff, since everyone benefits from reduced pollution.
• C)There is no tradeoff for society as a whole, since the cost of reducing pollution falls only on the firms affected by the requirements.
• D)There is a tradeoff only if some firms are forced to close.

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Definitions:

Net Present Value

A method used to evaluate investments by calculating the present value of expected future cash flows minus the initial investment cost.

Cash Inflows

Refers to the money received by a company during a particular period, including revenues from sales, investments, and financing activities.

Minimum Acceptable Rate

The lowest rate of return on an investment that a manager or investor is willing to accept.

Investment Decision

The process of making choices about where to allocate funds in various assets with the aim of generating returns over time.