Suppose a Competitive Industry Generates Some Sort of Pollution While

question 10

Multiple Choice

Suppose a competitive industry generates some sort of pollution while producing its output.In order to internalize the externality,the government may:

• A)impose a tax equal to the marginal external cost of pollution.
• B)offer a subsidy equal to the marginal external benefit derived from the consumption of the good.
• C)impose a quota that reduces output to the point where private marginal costs of production equal marginal revenue.
• D)impose a price floor on the good produced by the industry.

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was acquired and placed into service.

Debited

An accounting term describing the recording of an increase in assets or a decrease in liabilities and equity.

Liabilities

Financial obligations or debts a company owes to others, which must be settled over time through the transfer of assets, provision of services, or other economic benefits.

Dividends Distributed

The portion of a company's earnings paid out to shareholders.