During the production process Ajax Corporation releases pollution into the air. Ajax Corporation operates in a monopolistic competitive industry. Which of the following statements addresses the pollution situation?
A) Ajax is taking advantage of asymmetric information.
B) This is an example of a market failure and is a reason for the government to regulate the industry.
C) The quality of the product could be improved if the amount of pollution can be reduced.
D) This is known as the lemons problem.
Answer: B
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There can be an opportunity for covered interest arbitrage if:
a. the interest rate is low and the exchange rate is high. b. the forward/spot rate difference is either larger or smaller in percentage terms than the difference in the interest rates on two currencies. c. there is a time lag on the settlement of the transactions. d. the interest rate is high and the exchange rate is low.
If the wage rate is fixed at a certain level, the:
a. total wage cost curve is horizontal. b. total wage cost curve is a straight upward sloping line. c. MP must be constant. d. total wage cost curve will increase at an increasing rate. e. total wage cost curve will increase at a decreasing rate.