When Designing a Policy to Reduce Polluting Emissions, Policymakers Are

question 100

Multiple Choice

When designing a policy to reduce polluting emissions, policymakers are unlikely to know with certainty what the marginal cost of abatement is for each firm. If policymakers set an emissions cap of X units, and issue tradable permits for this amount, then they

• A) know the per- unit cost imposed on firms but do not know what the reduction in emissions will be.
• B) are uncertain about both the amount of emission reduction and the cost.
• C) know with certainty what the equilibrium permit price will be.
• D) know with certainty what the reduction in emissions will be and at what cost.
• E) know what the reduction in emissions will be but do not know at what cost.

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Definitions:

Jay's Treaty

An agreement in 1794 between the United States and Great Britain that sought to resolve issues remaining after the American Revolution and facilitate ten years of peaceful trade between the two countries.

Treaty Of Ghent

The agreement that ended the War of 1812 between the United States and Britain, signed in Ghent, Belgium, in 1814.

Fur Business

An industry involved in the buying, selling, and trading of animal fur for the production of fashion and clothing, historically significant in the economic development of North America and Europe.

New York Real Estate

The market segment dealing with the buying, selling, and renting of properties in New York.