In an effort to clean up the amount of sulfates introduced into the atmosphere the government has ruled that all polluters install smoke stack scrubbers on their smoke stacks and mandated a pollution limit on the amount of sulfates per parts of air
that may be legally emitted into the atmosphere. Suppose some of the polluters have found a more efficient way to eliminate the pollution. How will this discovery change the amount of sulfates emitted into the atmosphere?
The answer is that it will not change the amount of sulfates emitted. Since the firm is not legally allowed to adopt this technology it will continue to use the government-mandated technology of smoke stack scrubbers.
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The premium on a college education increases when
(a) the market demand for knowledge and skilled workers decreases, and all else is held constant. (b) the market supply of knowledge and skilled workers increases, and all else is held constant. (c) the growth in the demand for knowledge and skilled workers outpaces the growth in supply. (d) the growth in the supply of knowledge and skilled workers outpaces the growth in demand.
The ceteris paribus assumption is used in economic analyses in order to: a. cover special cases
b. include all relevant factors. c. add realism. d. keep the relationship between the two variables isolated from other events.