To Reduce the Level of Pollution Emitted by Firms in an Industry,the

question 107

Multiple Choice

To reduce the level of pollution emitted by firms in an industry,the government could use a cap-and-trade policy or a carbon tax (where the government taxes carbon producers based on the amount of carbon produced) .Which of the following is true?

• A) The price of the good sold will rise with the carbon tax policy,but not with the cap-and-trade policy.
• B) The quantity of the good sold will fall with the carbon tax policy,but not with the cap-and-trade policy.
• C) The price of the good sold will rise under either policy,but there will be no change in the level of production.
• D) The quantity of the good sold will fall under either policy,but there will be no change in the price of the good.
• E) The price of the good sold will rise under either policy,and there will be a reduction in the level of production.

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Definitions:

Production Lead Times

The total time it takes from the initiation to the completion of a production process, including both processing and waiting times.

Break-Even Time

The period it takes for a business or project to recoup its initial investment and start generating a profit.

Original Investment

The initial amount of money put into a project, asset, or business venture, used as a basis for calculating returns and profits.

Commencement Of Production

The point at which a company begins manufacturing products or producing goods in a new or existing facility.