When The Federal Government Orders Firms To Use Particular Methods To Reduce Pollution It Is Said To Be Using?

What does the phrase internalizing an external cost mean?

What does the phrase “internalizing an external cost” mean?

Forcing producers to factor into their production costs the cost of the externalities created in the production of their output.

Which of the following might be a method that the government could use to correct a negative externality?

Government can discourage negative externalities by

taxing goods and services that generate spillover costs

. Government can encourage positive externalities by subsidizing goods and services that generate spillover benefits.

Which of the following is an example of the US government’s use of command-and-control approach to reducing pollution?

Which of the above is an example of a command-and-control approach to reducing pollution?

market-based policy

. The U.S. government has frequently used a “command-and-control” approach in dealing with pollution.

Who was the economist who first proposed that governments use taxes and subsidies to correct for externalities group of answer choices?

Economist Arthur Pigou

was an early advocate of using taxes to correct for negative externalities. He suggested negative externalities could be reduced by imposing a cost that reflects the extra cost shifted to society on the producer of the externality.

What does the phrase internalizing an externality mean quizlet?

Less than. explain what internalizing an externality means.

altering incentives so that people take account of the external effects of their actions

. (gov can internalize an externality by imposing a tax on the producer to reduce the equilibrium quantity to the socially desirable quantity.)

Which of the following is an example of a positive externality?

Research and development (R&D) conducted by a company

can be a positive externality. R&D increases the private profits of a company but also has the added benefit of increasing the general level of knowledge within a society. Similarly, the emphasis on education is also a positive externality.

What are the 4 types of externalities?

An externality is a cost or benefit imposed onto a third party, which is not factored into the final price. There are four main types of externalities –

positive consumption externalities, positive production externalities, negative consumption externalities, or negative production externalities

.

Can an activity generate both positive and negative externalities at the same time?

Sometimes an activity can produce both

positive and negative externalities. For instance, if a nightclub opens up in an otherwise sleepy town, that could generate positive externalities such as greater revenues for the surrounding businesses.

How can negative externalities be controlled?

Remedies for Negative Externalities

One of the solutions to negative externalities is

to impose taxes

.

The goods and services commonly

include tobacco, to change people’s behavior. The taxes can be imposed to reduce the harmful effects of certain externalities such as air pollution, smoking, and drinking alcohol.

Is command-and-control efficient?

In some cases, given the marginal costs of pollution control, technological constraints, and existing institutions,

CAC

can be the most efficient means of achieving a society’s environmental protection goals.

What is the difference between Command & Control?

Command: The exercise of authority based upon certain knowledge to attain an objective. Control: The process of verifying and correcting activity such that the objective or goal of command is accomplished.

Which is an example of command-and-control regulation?

Command-and-control approach and environment standards

It is a mandated level of performance enforced through a piece of legislation. A few examples are

the limits set on the volume of timber that could be harvested, bans on the cutting of trees, and maximum levels legally allowed for pollution emissions

.

What is negative consumption externality?

Negative consumption externality:

When an individual’s consumption reduces the well-being of others who are not compensated by the individual

. Private marginal cost (PMB): The direct benefit to consumers of consuming an additional unit of a good by the consumer.

What is a Pigouvian subsidy?

A pigouvian subsidy is a

subsidy that is used to encourage behaviour that have positive effects on others who are not involved or society at large

. Behaviors or actions that are a benefit to others who are not involved in the transaction are called positive externalities.

Is a Pigouvian tax efficient?

Advantages of Pigouvian Tax

Pigouvian taxes

promote market efficiency

by incorporating the additional costs imposed by negative externalities.