A technological requirement policy is a type of __________ regulation. An environmental tax is a type of _________ regulation.

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BlackTom AI · Accepted Answer

The question asks to classify two types of regulation. It presents four answer options that pair a first label with a second label, so we should evaluate each pairing.
Option 1: 'Command; Incentive-based' — This pairing fits the concepts well: technological requirements are typically a command-and-control form of regulation that mandates certain standards or technologies, while environmental taxes are classic examples of incentive-based regulation designed to influence behavior through economic incentives.
Option 2: 'Incentive-based; Command' — This suggests environmental regulations are primarily about commands and technologies, and taxes are command-based. In reality, environmental taxes are designed to create financial incentives, not mandates, so this reverses the standard understanding.
Option 3: 'Incentive-based; Incentive-based' — This would claim both policies operate under incentive-based approaches, which mislabels technological requirements as incentives. Technological requirements are typically mandates, not voluntary incentives.
Option 4: 'Command; Command' — This implies both policies use command-and-control approaches. While technological requirements are commands, environmental taxes are not commands; they use pricing signals to steer behavior, not direct prohibition or obligation.

To recap the core ideas: a technological requirement policy imposes a specific standard or technology that firms must meet (a directive or mandate). An environmental tax uses price changes to influence behavior, which is characteristic of an incentive-based, market-oriented approach rather than a direct command.
Therefore, option 1 correctly pairs the two concepts, while the other options misclassify at least one of the policies, either by swapping the types or by treating incentives as commands. The distinctions hinge on whether the policy imposes a specific obligation (command) or uses economic levers to influence choices (incentive-based).

econ_102_120251_245625 Week 14 Quiz

A technological requirement policy is a type of __ regulation. An environmental tax is a type of _ regulation.

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