Economists View Pollution as an Economic Problem That Arises Because

question 102

Multiple Choice

Economists view pollution as an economic problem that arises because

• A)private enterprise always minimizes the amount of pollution produced
• B)profitable firms rarely pollute
• C)as the economy grows, the level of pollution declines
• D)firms that pollute do not pay the full social cost of producing their output
• E)pollution costs are borne by the consumer

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Definitions:

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums.

Incremental Basis

A method of calculating changes in costs or benefits that result from small variations in the quantity of output or input.

Differential Basis

A method of calculating or analyzing the difference in costs or revenues between two alternative actions.

Sunk Cost

A cost that cannot be changed by any present or future decision.