Firms a and B Both Produce a Good Whose Manufacture

question 144

Multiple Choice

Firms A and B both produce a good whose manufacture causes pollution,but the firms differ in their marginal benefit from pollution.In this case,an emissions standard would:

• A) reduce pollution in the most effective manner.
• B) lead to an unequal reduction in pollution for both firms.
• C) not be efficient since it does not take into account differences in marginal benefits from polluting.
• D) be preferred to an emissions tax since it takes into account differences in marginal benefits.

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Definitions:

Market

A system or environment where buyers and sellers interact to trade goods, services, or information.

Pricing

The process of determining the monetary value at which goods and services will be sold.

Psychographic Measures

Tools or methods used to assess and analyze the psychological attributes of individuals, such as interests, values, and lifestyles.

Demographic Data

Information related to the characteristics of a population, such as age, gender, income, and education, used for statistical analysis.