Cite an advantage and a disadvantage for command-and-control vs. incentive-based approaches. Then do the same for environmental taxes vs. emissions trading.
What will be an ideal response?
Command-and-control is simple, since it applies equally to all firms. It may also be seen as fair. The disadvantage is it is inefficient, because it applies uniformly. Incentives-based regulations have the advantage of flexibility, allowing firms that can clean up at lower cost to reduce emissions more than firms that have a higher cost of clean-up. One problem may be an old source bias, whereby older technologies are exempt from trading.As for taxes vs. trading, taxes have the advantage of familiarity. A disadvantage is knowing how to determine external costs in order to set the tax. Emissions trading leaves it to firms todetermine the cost of clean-up. This is an advantage, since firms have better information than government on clean-up costs. Disadvantages include problems like thin trading, so that the emissions price is not determined competitively.
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The government component (G) of total output includes goods and services purchased by
A. the federal government plus transfer payments. B. all government institutions plus transfer payments. C. all government institutions. D. all government institutions plus tax revenues.
Which would shift the aggregate demand curve? A change in:
a. The legal-institutional environment b. Input prices c. The prices of imported resources d. Net export spending
Many developing countries face a balance of payments constraint because:
A. they fail to implement exchange rate policy correctly. B. they hold too few international reserves. C. they hold too many international reserves. D. the IMF forces them to adopt policies that are counterproductive.
Under the U.S. system of regulation, most regulars are selected from
A. university professors who understand the nature of the industry and who understand the true interests of consumers. B. the industry that is to be regulated. C. consumer advocacy groups. D. politicians and their friends.