When the Government Can Set Emissions Standards for Polluting Industries

question 28

Multiple Choice

When the government can set emissions standards for polluting industries, which of the following statements is correct?

• A)The government should set the emissions standard to zero because pollution is bad for people.
• B)The government should set the emissions standard to achieve the socially optimal level of production which, in general, is not equal to zero.
• C)The government should employ emissions taxes instead because emissions standards cannot generally achieve the social optimum.
• D)The government should not set emissions standards because the market equilibrium will coincide with the social optimum in the absence of intervention.

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Definitions:

Real Hourly Compensation

The wages received by an employee adjusted for inflation, reflecting the true purchasing power over time.

United States

A country in North America consisting of 50 states and a federal district, known for its diverse geography, culture, and economy.

Marginal Revenue Product (MRP)

The change in a firm’s total revenue when it employs 1 additional unit of a resource (the quantity of all other resources employed remaining constant); equal to the change in total revenue divided by the change in the quantity of the resource employed.

Total Revenue

The total amount of money received by a company from the sale of goods or services before any expenses are deducted.