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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