If the Number of Available Tradable Emissions Permits Increases, the Equilibrium

question 22

Multiple Choice

If the number of available tradable emissions permits increases, the equilibrium price of the permits and the equilibrium quantity _.

• A)increases; does not change
• B)increases; increases
• C)decreases; does not
• D)change decreases; increases

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Definitions:

Total Variable Costs

The total of all costs that vary with the level of output, including costs such as materials and labor that change with the scale of production.

Profit-Maximizing Level

The output level at which a firm achieves the highest possible profit, where marginal revenue equals marginal cost.

Marginal Revenue

The additional income earned by selling one more unit of a product or service.

Profit-Maximizing Level

The point at which a firm produces at a level where the difference between total revenue and total cost is the greatest.