If a Firm Goes Out of Business Because an Environmental

question 11

True/False

If a firm goes out of business because an environmental regulation now requires them to incur pollution-control costs that they were previously getting for free (at society's expense),society will be better off to have the polluter exit the industry.

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Definitions:

Law of Demand

A fundamental principle stating that all else being equal, as the price of a good increases, the quantity demanded of that good decreases, and vice versa.

Marginal Utilities

The additional satisfaction or utility that a person receives from consuming an additional unit of a good or service.

Optimal Choice

The decision that yields the highest benefit or utility for an individual, considering constraints and available information.

Marginal Rate

In economics, it generally refers to the increase or decrease in the cost or benefit of producing one additional unit of a good or service.