Economists Often Argue That a System of Tradable Pollution Permits

question 17

Multiple Choice

Economists often argue that a system of tradable pollution permits is cost-effective because

• A)firms facing a high marginal cost of abatement will not abate at all.
• B)firms facing a low marginal cost of abatement will not abate at all.
• C)firms facing a marginal cost of abatement lower than the permit price will not abate at all.
• D)firms with a marginal cost of abatement lower than the permit price will buy permits and abate less.
• E)firms will choose their abatement so that their marginal cost of abatement equals the price of a permit,which is the same for all firms.

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