How does a command-and-control policy differ from a market-based policy?
What will be an ideal response?
Governments sometimes use a mix of policies to encourage firms and consumers to internalize externalities. Command-and-control is a centralized system of controlling production in which an authority decides the allocation of resources. Here, the government directly regulates the allocation of resources (for example, the government bans smoking in restaurants). Market-based policies are those where the government provides incentives for private organizations to internalize the externality. Market-based policies include Pigouvian taxes or subsidies and markets for pollution rights.
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Water quality in the United States has ____ in the past 25 years
a. improved b. worsened c. remained unchanged d. improved slightly before a recent deterioration
A budget deficit is the
A. annual excess of government spending over revenue raised by taxes, fees, and charges. B. shortfall of Social Security collections toward payment of benefits. C. amount by which tax revenues and borrowed funds fall short of government expenditures. D. excess of tax revenues over expenditures.