Explain why environmentally minded firms in a competitive industry will find it difficult to take environmental action.
What will be an ideal response?
Firms can survive in competition only if they operate at minimum average cost. A firm choosing a more expensive production process to reduce pollution will not be able to compete with a firm ignoring externalities. The environmentally conscious firm will lose money in the long run.
You might also like to view...
The interest-rate-based monetary policy transmission mechanism emphasizes the
A) indirect effect of a change in the money supply that operates via a change in total planned expenditures generated by a change in the interest rate. B) direct effect of a change in the money supply that operates via a change in total planned production generated by a change in the price level. C) direct effect of a change in the money supply that operates via a change in total planned expenditures generated by a change in the interest rate. D) indirect effect of a change in the money supply that operates via a change in total planned production generated by a change in the price level.
Which of the following is not a characteristic of a perfectly competitive market?
a. Different sellers sell identical products. b. There are many sellers. c. Sellers must accept the price the market determines. d. All of the above are characteristics of a perfectly competitive market.