Question

Many observers believe that the levels of pollution in our society are too high. True or False: If society wishes to reduce overall pollution by a certain amount, it is efficient to have firms with highest profit bearing the largest burden of reducing pollution and firms with lowest profit bearing the least burden.
a. True
b. False
Which of the following statements is true about command-and-control approaches to reducing pollutions? Check all that apply.
a. Command-and-control approaches often rely on uniform reductions among firms
b. Command-and-control approaches are efficient because they ensure each firm reduces the mandated amount of pollution.
c. Command-and-control approaches are generally unable to target the firms that should undertake bigger reductions.

Answer 1

Answer:

First question: the given statement is false.

Second question: options a and c are correct.

Explanation:

If a society whishes to reduce overall pollution by a certain amount, then it is efficient when different firms reduce pollution by different amounts. This is because the cost of reducing pollution differs across the firms.

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The CAC policy is inefficient because they rely on mandated uniform reductions. A firm will not reduce emissions more than the mandated amount because there is no incentive to do so. Since, the reductions are uniform, it is not able to target the firms that require bigger reductions.