Since Air Pollution Creates a Negative Externality

question 64

Multiple Choice

Since air pollution creates a negative externality,

• A)social welfare will be enhanced when some, but not all air pollution is eliminated.
• B)social welfare is optimal when all air pollution is eliminated.
• C)governments should encourage private firms to consider only private costs.
• D)the free market result maximizes social welfare.

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Definitions:

Net Income

The total revenue minus expenses, taxes, and costs over a specific period, indicating the profit earned by a company.

Amortized

The gradual reduction of a debt over a period of time through regular payments that cover both interest and principal.

Bonds Payable

Long-term debt instruments issued by corporations or governments to raise capital, with an obligation to pay interest and repay principal at a specified date.

Unamortized Premium

The portion of a bond premium that has not yet been amortized or gradually written off over the life of the bond.