In an effort to save energy, a 1992 federal law requires that new showerheads cannot flow at a rate faster than 2.5 gallons per minute. Which of the following statements is TRUE?
I. This law is an example of command and control.
II. This policy reduces energy use at a lower cost than a tax on water.
III. Economists would prefer to simply tax water consumption because this gives people the flexibility to reduce water consumption in their lowest-valued use.
A) I only
B) I and II only
C) III only
D) I and III only

Question

Quizplus · Accepted Answer

The law is an example of command and control because it mandates a specific standard (I). Economists generally prefer taxes over command and control because taxes allow individuals to choose how to reduce consumption, thus minimizing costs (III).

In an Effort to Save Energy, a 1992 Federal Law