Which of the Following Answers Best Explains How the Market

question 113

Multiple Choice

Which of the following answers best explains how the market for tradeable allowances in pollution works?

• A) Firms are given a particular dollar subsidy value to clean up pollution, and they can trade these subsidies between themselves if they fall below or surpass the limits.
• B) Firms are taxed a particular percentage rate according to how much they pollute, and they can trade the pollutants to reduce the effective tax rates they pay.
• C) Firms are required to stick to particular production levels, and if they go beyond these production levels, they are charged a percentage of their profits.
• D) Firms are given a particular allowance amount of pollutants and if they fall below or surpass these targets they can trade their available allowances with other firms.

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Definitions:

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