When Pollution (A Negative Externality) Is Created by Firms, Which

question 113

Multiple Choice

When pollution (a negative externality) is created by firms, which of the following is NOT a valid way for the government to restore the social optimum?

• A) require firms to install pollution-abatement equipment
• B) require firms to change production techniques to reduce emissions
• C) levy a tax on the production of the good
• D) require firms to pay for the environmental damage they create
• E) offer a subsidy to firms to reduce their production cost

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Definitions:

Monosaccharide Units

The simplest form of carbohydrates, consisting of single sugar molecules like glucose or fructose, which serve as energy sources.

Glucose

A basic form of sugar that serves as a crucial source of energy for living beings and is found in numerous carbohydrates.

Starch

A polysaccharide carbohydrate consisting of a large number of glucose units, used by plants as a way to store energy.

Cellulose

A polysaccharide consisting of a linear chain of glucose units, serving as the main structural component of plant cell walls.