When Comparing a System of Emission Taxes to a System

question 24

Multiple Choice

When comparing a system of emission taxes to a system of tradable pollution permits, the same amount of pollution could be abated in each as long as

• A) the marginal cost of abatement was equal across all firms.
• B) the cap on emissions was chosen such that the equilibrium price of the permits, p×, could rise over time.
• C) the emission tax rate, t, was applied equally to all firms.
• D) the marginal benefit of abatement curve was horizontal.
• E) the cap on emissions was chosen such that the equilibrium price of the permits, p×, was equal to the emissions tax rate, t.

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Definitions:

Piaget's Theory

A theory of cognitive development that outlines how children progress through a series of stages, each marked by unique intellectual challenges and achievements.

Equilibrium

A state of balance or stability, often referring to the body's ability to maintain its center of gravity, or in psychology, a state of mental or emotional balance.

Assimilation

The process by which a person or a group's language and/or culture come to resemble those of another group.

Assimilation

The method through which people or groups from various ethnic backgrounds become assimilated into a society's prevailing culture.