If some firms internalize their external costs by being a cleaner and more "environmentally friendly" producers than other firms that do not, then which of the following offers the best and most complete description of this situation?
a. The environmentally friendly firm will be operating at a higher marginal and average cost than those firms that shift some costs to society in the form of external costs.
b. In a long-run competitive equilibrium in which consumers do not distinguish between environmentally friendly and standard producers, the environmentally producers will receive negative economic profits and be forced to change or exit.
c. Without regulations requiring firms to internalize their external costs, producers can only afford to be environmentally friendly if consumers reward them with a price premium.
d. None of the above is correct.
d
You might also like to view...
Policies that restrict supply could generate an increase in social welfare because the increase in producer surplus could exceed the decrease in consumer surplus
Indicate whether the statement is true or false
The reason that it is possible for the economy in the above figure to be at E2 rather than at E1 is that
A) in the long run there is always less than full employment. B) in the short run the economy can produce more than it can in a long-run full-adjustment situation. C) AD always shifts outward and never shifts inward. D) the economy must be in a recession.
A consumer purchases just two goods: X and Y. If the price of one good X rises, the consumer buys less of good X and the same amount of good Y
Indicate whether the statement is true or false
Import tariffs are ___________ on imports, and import quotas are ____________ on imports.
a. subsidies; taxes b. limits; subsidies c. taxes; limits d. limits; taxes