Explain why these data do not communicate whether the regulations outlined by the CAAA of 1990 are efficient.
According to the EPA’s prospective analysis of the 1990 to 2010 period, total social benefits (TSB) associated with the CAAA of 1990 are estimated at $690 billion ($1990) and the comparable total social cost (TSC) estimates are $180 billion ($1990).
Even though the estimated TSB associated with the CAAA of 1990 exceed the estimated TSC, there is no reason to assume that abatement controls are at their efficient level. Such an evaluation can be made only by finding out whether the marginal social benefit (MSB) equals the marginal social cost (MSC) at that point.
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If a rapid disinflation has a lower sacrifice ratio than a slow disinflation, then reducing inflation is best accomplished by
A) gradualism. B) increasing money growth. C) reducing interest rates. D) a cold-turkey approach.
A drop in deposit rates, all else constant, __________ a bank's __________ risk
A) lowers; credit B) lowers; interest rate C) raises; credit D) raises; interest rate
A tax system in which the tax rate on everyone's first $10,000 of income is 10 percent, the tax rate on everyone's second $10,000 of income is 15 percent, and the tax rate on all income over $20,000 is 25 percent is a(n):
a. proportional tax. b. equitable tax. c. head tax. d. unit tax. e. progressive tax.
Banks will hold additional excess reserves when
a. loans to customers look safe and interest rates are high. b. they anticipate a bank audit. c. loans to customers look risky and interest rates are low. d. the economy is booming and there is a large demand for loans.