When the Government Determines the Permissible Level of Pollution and Issues

question 255

Multiple Choice

When the government determines the permissible level of pollution and issues permits to each polluting firm,this is a form of

• A)incentive-based regulation.
• B)command-and-control regulation.
• C)tax on pollution.
• D)government barrier to the workings of demand and supply.

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Definitions:

Fringe Firms

Smaller companies in a market that operate alongside the largest or mainstream businesses, often filling niches or offering alternative products.

Price Takers

Firms or individuals in a market who accept the prevailing prices and whose actions have no effect on said prices due to their small market share.

Kinked Demand

A demand curve that has a distinct bend or kink, typically resulting from an oligopolistic market structure where firms face different elasticities for price increases versus price decreases.

Oligopoly Model

A market structure characterized by a small number of large firms that dominate the market, leading to limited competition and potentially collusive behavior.