What Is the Difference Between Command-And-Control Policies and Market-Based Policies

question 147

Multiple Choice

What is the difference between command-and-control policies and market-based policies toward externalities?

• A)Command-and-control policies provide incentives for private decisionmakers to solve the problems on their own, whereas market-based policies regulate behavior directly.
• B)Command-and-control policies rely on taxes, whereas market-based policies rely on quotas.
• C)Command-and-control policies regulate behavior directly, whereas market-based policies provide incentives for private decisionmakers to change their behavior.
• D)Command-and-control policies are efficient, whereas market-based policies are inefficient.

---

Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary depending on income or profits respectively.

WACC

Weighted Average Cost of Capital; the average rate of return a company is expected to pay to all its security holders to finance its assets.

Par Value

The face value of a bond or stock as stated on the certificate or instrument, which differs from its market value.

WACC Calculation

The process of calculating the Weighted Average Cost of Capital, which measures a firm's cost of capital from all sources, weighted according to the proportion of each capital component.