Which of the Following Is the Best Definition of a Cap-And-Trade

question 88

Multiple Choice

Which of the following is the best definition of a cap-and-trade policy for pollution?

• A) The government sets a cap on emissions.Firms are given permits by the government to emit pollutants and have the right to trade the permits with each other.
• B) Emissions of a pollutant are capped by the government at the current level,and the good being produced can still be traded in the market.
• C) Production of the good is capped by the government at the current level,but the good can still be traded in the market.
• D) The number of firms producing a good is capped by the government at the current level,but the good can still be traded in the market.
• E) Consumption of the good being produced is capped by the government at the current level,but the good can still be traded in the market.

---

Definitions:

Accrued Expenses

Expenses that have been incurred but not yet paid or recorded in the financial statements, representing liabilities.

Accrued Revenues

Accrued revenues are earnings recorded in the financial statements for goods delivered or services provided, although no cash has been received yet.

Prepaid Items

Prepaid items refer to expenses paid in advance for goods or services to be received in the future.

Adjusting Entries

These are journal entries made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred.