In some parts of the United States, sugar beets are grown and harvested. The process of producing usable sugar from the beets generates foul-smelling smoke. A government policy that limits the emission of smoke by sugar-beet-processing firms is an example of
A)a market-based policy.
B)a command-and-control policy.
C)tradable pollution permits.
D)transaction costs.

Question

Quizplus · Accepted Answer

A government policy that directly regulates or mandates the reduction of emissions is known as a command-and-control policy. This is because the government sets specific limits on pollution and requires firms to adhere to these limits. In this case, the government policy that limits the emission of foul-smelling smoke from sugar-beet-processing firms falls into the category of command-and-control policy because it is a direct regulation. Market-based policies, such as tradable pollution permits, create economic incentives for firms to reduce their emissions rather than mandating specific emissions reductions. Transaction costs refer to the costs associated with conducting business transactions, so this is not relevant to this scenario.

In Some Parts of the United States, Sugar Beets Are