With Marketable Pollution Permits, If the Demand for Emissions Shifts

question 64

Multiple Choice

With marketable pollution permits, if the demand for emissions shifts to the left, the equilibrium price of permits _______ and the equilibrium quantity _______ .

• A) increases; stays the same
• B) falls; increases
• C) falls; stays the same
• D) increases; increases

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Definitions:

Diminishing-Balance Method

A method of accelerated depreciation where an asset loses value by a fixed percentage each year over its useful life.

Constant Percentage

A fixed rate applied over time or across instances, often used in calculation methods or financial formulas.

Straight-Line Depreciation

is a method of calculating the depreciation of an asset by evenly spreading its cost over its useful life.

Residual Value

The anticipated amount an asset is expected to be worth when it is sold after reaching the end of its usability.