Refer to the Figures Below to Answer This Question

question 37

Essay

Refer to the figures below to answer this question:
Cap-and-trade versus emissions fee when marginal social benefits are inelastic and costs are uncertai Cap-and-trade versus emissions fee when marginal social benefits are elastic and costs are uncertain:
a)In case of an inelastic marginal social benefit curve, what type of pollution reduction system shoul the government employ? Why?
b)If the social benefit curve is elastic, does your answer change?
c)What are the advantages and disadvantages of cap-and-trade systems over emission fee systems when the inflation and change in marginal costs are considered?

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Definitions:

Mirror-Image Perceptions

Mutual views often held by conflicting people, as when each side sees itself as ethical and peaceful and views the other side as evil and aggressive.

Oxytocin

a hormone that plays a role in social bonding, sexual reproduction, and during and after childbirth.

Testosterone

A steroid hormone primarily found in males, responsible for the development of male sexual characteristics and reproductive functions.

Dopamine

A neurotransmitter associated with movement, attention, learning, and the brain's pleasure and reward system.