If a firm had a fixed proportions technology, then the pollution produced by this firm:
A) cannot be reduced.
B) can be reduced only by lowering the level of output (holding technology constant).
C) can be reduced by changing how the output is produced within the bounds of the existing technology.
D) can be reduced only by increasing the number of firms in the industry.
E) can be reduced only by changing the technology.

Question

Quizplus · Accepted Answer

With fixed proportions technology, the firm can only change the level of output to reduce pollution. It cannot change how output is produced or the technology itself. Therefore, the only option is to decrease production to decrease pollution.

If a Firm Had a Fixed Proportions Technology, Then the Pollution