As part of its proposal to win the 2012 Olympics,London developed a carbon offset plan to reduce the Games' impact on the environment.In 2011,the organizers decided to drop this plan to reduce emissions.We can conclude that
A) the marginal cost of reducing emissions exceeded the marginal benefits of reducing emissions.
B) the organizers are not making a rational decision.
C) the organizers are ignoring a sunk cost.
D) there are no incentives to reduce carbon emissions.
E) it is difficult to calculate the cost of reducing emissions.

Question

Quizplus · Accepted Answer

The fact that London dropped its carbon offset plan implies that the marginal cost of reducing emissions exceeded the marginal benefits of reducing emissions. Otherwise, the organizers would have continued with the plan. This suggests a rational decision was made based on the perceived costs and benefits. The other options are not supported by the information given in the question.

As Part of Its Proposal to Win the 2012 Olympics,London