Firm A and firm B both produce a good whose manufacture causes pollution,but the firms differ in their marginal benefit from pollution.In this case,an emissions standard would:
A)reduce pollution in the most effective manner.
B)lead to an unequal reduction in pollution for both firms.
C)not be efficient since it does not take into account differences in marginal benefits from polluting.
D)be preferred to an emissions tax since it takes into account differences in marginal benefits.

Question

Quizplus · Accepted Answer

An emissions standard does not account for the differences in marginal benefits from pollution between firms, leading to inefficiencies.

Firm a and Firm B Both Produce a Good Whose