Once Tradable Pollution Permits Have Been Allocated to Firms

question 43

Multiple Choice

Once tradable pollution permits have been allocated to firms,

• A)the government controls the price of permits.
• B)firms that can reduce pollution only at high cost will be willing to pay the most for the pollution permits.
• C)the value of pollution-saving technology will be lower than the market value of a pollution permit.
• D)the Coase theorem is no longer applicable as a solution to reducing pollution.

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Definitions:

Farm Product

Goods that are produced by farming activities, such as crops and livestock, intended for consumption or further processing.

Farmer's Market

A physical retail marketplace intended for farmers to sell directly to consumers fresh produce and local goods.

Price Elasticity of Demand

The degree to which the quantity demanded of a good changes in response to a change in its price, holding everything else constant.

Air Travel

The act of travelling from one place to another through the atmosphere, typically using airplanes.