How does a command-and-control policy differ from a market-based ...

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How does a command-and-control policy differ from a market-based policy?
 
  What will be an ideal response?

Question 2

If a company pays a dividend of 5 to be received one year from now, dividends are expected to grow at a rate of 8 percent per year for the indefinite future, and the interest rate is 14 percent,
 
  the price of the company's stock should be ________ per share.
  A) 8.00 B) 83.33 C) 227.27 D) 610.00

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Answer to Question 1

Governments sometimes use a mix of policies to encourage firms and consumers to internalize externalities. Command-and-control is a centralized system of controlling production in which an authority decides the allocation of resources. Here, the government directly regulates the allocation of resources (for example, the government bans smoking in restaurants). Market-based policies are those where the government provides incentives for private organizations to internalize the externality. Market-based policies include Pigouvian taxes or subsidies and markets for pollution rights.

Answer to Question 2

B