What are the benefits of using a pollution tax rather than a command-and-control system to internalize an externality?
What will be an ideal response?
A pollution tax will generate less pollution than a command-and-control policy, since the firm is free to choose either to pay the tax or to come up with a pollution control system that is less costly than the tax. Since firms differ in their production methods, command-and-control policies, which mandate the method of pollution control to the firm, might not be the most efficient method for that firm to use. A pollution tax will also lead to lower prices for the consumers, since the firm can most likely find a cheaper way to control pollution than the method mandated by the government. Finally, a pollution tax generates revenues for the government that might be used to assist with the pollution abatement.
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Economic theory assumes people make decisions by weighing additions to cost against additions to benefit, which can best be described as
A) additivism. B) capitalism. C) marginalism. D) opportunism. E) rationalism.
An increase in the relative price of a good cannot be caused by
A) an increase in the nominal price of the good that is greater than the increase in the nominal price of the other good. B) a decrease in the nominal price of the good that is less than the decrease in the nominal price of the other good. C) a decrease in the nominal price of the other good while the price of the good itself remains constant. D) an increase in the nominal price of the other good while the price of the good itself remains constant.
Net wealth is calculated by subtracting what from assets?
a. Capital b. Liabilities c. Interest d. Depreciation
Beyond the provision of public goods, government exists to address:
A. national defense. B. limiting personal freedom. C. the problem of declining moral values. D. externalities and property rights.