In a Cap-And-Trade Program, as Polluters Buy and Sell Permits

question 10

Multiple Choice

In a cap-and-trade program, as polluters buy and sell permits, they move to a situation where

• A) all firms' marginal abatement costs are equal to the price of the permits.
• B) the demand for permits will exceed the supply.
• C) total abatement costs are equal to the total amount spent on permits.
• D) the total amount spent on permits is less than the total amount spent on abatement.

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Definitions:

Tax Benefits

Advantages granted by the government to reduce one's tax liability.

Acquisition

The process of obtaining control of another company or asset through purchase or merger.

Antitrust Regulations

Laws and regulations designed to promote competition and prevent monopolies by prohibiting business practices that restrict or control trade and market dominance.

Divest

The process of selling off subsidiary business interests or investments as a strategic move for a company.