Question

Transactions costs are defined to be the costs of: a. finding and obtaining offsets. b. negotiating and enforcing contracts. c. eliminating market and government failures. d. complying with environmental regulations. The environmental approach found in the Clean Air Act of 1990 is: a. a thousand points of light. b. price caps. c. command-and-control regulation. d. marketable pollution permits.

Answer 1

1. Option B.

• Transaction costs are defined to be the costs of negotiating and enforcing contracts.
• These are the costs that are Incured by the firms when they purchase or sell goods and services.
• To minimise this costs, the firms produce their own goods and services rather than purchasing them from other firms.

2. Option D.

• The clean air Act that was passed in 1990 is an act that was passed to reduce the air pollution and to improve the air quality In order to protect the health and environment.
• This Act uses marketable pollution permits as an environmental approach in order to achieve a desired level of pollution control and to reduce the negative externalities that arise from air pollution.