U.S. tire production involves large social costs from air pollution. How will stronger U.S. environmental regulations requiring firms to reduce their air pollutants affect U.S. tire imports?
a. Stronger U.S. environmental regulations will cause increases in U.S. tire imports.
b. Stronger U.S. environmental regulations will cause decreases in U.S. tire imports.
c. Stronger U.S. environmental regulations will neither cause increases nor decreases in U.S. tire imports
d. Stronger U.S. environmental regulations will cause decreases in U.S. tire imports but not reduce tire producers' emissions of air pollutants.
Ans: b. Stronger U.S. environmental regulations will cause decreases in U.S. tire imports.
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