Chapter 74, Problem 6MCQ

To determine

The correct option that makes the which inflexibility inefficient even when it is correctly applied.

Answer to Problem 6MCQ

From the available options, the correct option is environmental standards.

Explanation of Solution

The inflexibility of environmental standards makes it difficult or inefficient even if they are applied correctly because these standards keep the externalities as they are and do not change them and these standards include the cost of the job, productivity, or unfavorable economic effects.

Whereas, the inflexibility of emissions of taxes, tradable emissions permits, and trade programs, Coasian bargaining provide efficient results as these permits give the right to produce a certain level of pollution which means they impose less cost.

Therefore, the correct option is a (environmental standards).

Economics Concept Introduction

Introduction: Inflexibility is the unwillingness to change or adopt new conditions.

Externality problems refer to the fundamental economic policy problems while firms do not internalize the indirect costs or indirect benefits from any of their economic transactions in the market.