The EPA's System of Tradable Allowances

question 256

Multiple Choice

The EPA's system of tradable allowances:

• A) was unable to internalize the external costs of pollution.
• B) actually lead to increased levels of pollution.
• C) was moderately successful in helping to decrease pollution levels.
• D) is a successful application of the Coase theorem.

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Definitions:

Economic Efficiency

A situation where resources are allocated in a way that maximizes the production of goods and services, and minimizes waste.

Subsidies

Financial support granted by the government to reduce costs and encourage production or consumption in certain sectors.

Taxpayer Expense

Costs incurred by the government that are funded by the taxes collected from citizens and businesses.

Government Projects

Initiatives or programs undertaken by a governmental entity, designed to serve public interests or improve infrastructure, health, education, etc.