During the production process Ajax Corporation releases pollution into the air. Ajax Corporation operates in a monopolistic competitive industry. Which of the following statements addresses the pollution situation?
A) Ajax is taking advantage of asymmetric information.
B) This is an example of a market failure and is a reason for the government to regulate the industry.
C) The quality of the product could be improved if the amount of pollution can be reduced.
D) This is known as the lemons problem.
Answer: B
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Which of the following can an economist predict with the most accuracy?
a. how Gwen will respond to an increase in the price of down jackets b. how Larry, Terry, and Mateo will respond to a decrease in the price of orange juice c. how a group of ten will respond to an increase in the price of motorcycles d. how a group of 100 will respond to a decrease in the price of cell phones
If the United States' unemployment rate is 25 percent and the capacity utilization rate is 50 percent, the economy would be in the midst of a _____________.
Fill in the blank(s) with the appropriate word(s).
Which statement concerning monopolistic competition is false?
A. Firms may experience losses in the short run. B. In the long run P = ATC > MC. C. Firms differentiate their products, but the products are relatively substitutable. D. Firms may experience positive economic profits in the long run since barriers to entry are significant.