Suppose That the EPA Has Proposed Strict Controls on the Amount

question 124

Multiple Choice

Suppose that the EPA has proposed strict controls on the amount of sulfur that diesel fuel contains. These controls were designed to fully offset the cost of pollution generated by diesel fuel vehicles. The effect of the regulation is estimated to increase the equilibrium price of a gallon of diesel fuel by 10 cents. Assuming that the supply of diesel fuel has a positive slope and demand has a negative slope, one can infer that the EPA determined that:

• A)the external benefit of using diesel fuel is less than 10 cents.
• B)the external cost of using diesel fuel is greater than 10 cents.
• C)the external cost of using diesel fuel is less than 10 cents.
• D)the external cost of using diesel fuel is equal to 10 cents.

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Definitions:

Cultural Competence

The ability of an individual or organization to understand, communicate with, and effectively interact with people across cultures, being aware of one's own cultural worldview while gaining knowledge of different cultural practices and worldviews.

Auxiliary Consumption

Secondary or supplemental use of products or services that support or enhance the primary consumption activities.

Production

The process of creating, manufacturing, or otherwise bringing goods or content into existence.

Emotional Engagement

The emotional connection and response that a consumer has with a brand, which can influence loyalty and purchasing behavior.