Use the Following to Answer Questions

question 95

Multiple Choice

Use the following to answer questions :
Figure: Efficiency and Pollution
-(Figure: Efficiency and Pollution) Use Figure: Efficiency and Pollution.Assume that firms are the only beneficiaries of pollution and that costs are borne solely by others in the society.If the government imposed an environmental standard that did NOT allow the quantity of pollution to exceed 40 tonnes,there would be:

• A) a socially optimal quantity of pollution.
• B) too little pollution because its marginal social benefit would exceed its marginal social cost.
• C) too much pollution because its marginal social cost would exceed its marginal social benefit.
• D) too much pollution because any pollution is too much from an economist's perspective.

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Definitions:

Retained Earnings

The portion of net income not distributed to shareholders and instead reinvested in the company or used to pay off debt.

Common Stock

A type of security that represents ownership in a corporation, with voting rights and potential for dividends.

Stated Value

A value assigned to no-par value stock by the board of directors of a company and used for accounting purposes.

Paid-In Capital in Excess of Par

The amount received by a company from selling its shares above their par value.