In Equilibrium, the Price of a Transferable Emissions Permit

question 59

Multiple Choice

In equilibrium, the price of a transferable emissions permit:

• A) is constrained to the amount the government first charged for it.
• B) equals the marginal cost of abatement for all firms.
• C) equals the marginal cost of abatement for the firm with the highest cost, and exceeds the marginal cost of abatement of other firms.
• D) equals the marginal cost of abatement for the firm with the lowest cost, and is less than the marginal cost of abatement of other firms.
• E) equals the marginal social cost of emissions.

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Definitions:

Return on Investment

A metric used to assess the profitability of an investment, calculated as the net profit of the investment divided by its cost.

Operating Assets

Resources owned by a business that are used in its day-to-day operations to generate revenue and are expected to provide benefits in the future.

Controllable Margin

A measure of profitability that represents the amount of revenue left after deducting all controllable expenses.

ROI

Return on Investment, a performance measure used to evaluate the efficiency or profitability of an investment relative to its cost.