When Using the Economic Efficiency Approach to Controlling Air and Water

Multiple Choice

When using the economic efficiency approach to controlling air and water pollution, the government

A) forces each firm to produce emissions in the most cost efficient manner irrespective of its cost structure
B) offers each firm the flexibility to reduce emissions in the most cost effective manner, given its unique cost structure
C) offers each firm the option of choosing between the cost minimizing emission level and the profit maximizing emission level
D) provides each firm with some fixed rules and then requires them to maximize profits given these fixed rules
E) offers each firm the option of using marginal cost pricing and average cost pricing when determining the optimum emissions levels