Question

suppose the figure to the right illustrates the marginal cost and marginal benefit from reducing sulfur dioxide pollution. how could the government use a command - and - control approach to reduce pollution to the optimal level for society? the government could a. prohibit sulfur dioxide pollution entirely. b. reduce transaction costs to encourage private solutions to the problems associated with sulfur dioxide pollution. c. tax each ton of sulfur dioxide pollution. d. limit sulfur dioxide pollution to a particular quantity per year. e. subsidize each ton of sulfur dioxide pollution.

Explanation:

• Option A: Prohibiting sulfur dioxide pollution entirely is extreme. The optimal level is where marginal cost equals marginal benefit (not zero pollution in most cases).
• Option B: Reducing transaction costs is more of a market - based (Coase - theorem related) approach, not command - and - control.
• Option C: Taxing is a market - based approach (Pigovian tax), not command - and - control.
• Option D: Command - and - control regulations often set quantity limits (e.g., through permits, quotas). Limiting sulfur dioxide pollution to a particular quantity per year is a classic command - and - control method.
• Option E: Subsidizing pollution is counter - intuitive for reducing pollution.

Answer:

D. limit sulfur dioxide pollution to a particular quantity per year.