If the Government Wanted to Efficiently Limit the Emission of Carbon

question 30

Multiple Choice

If the government wanted to efficiently limit the emission of carbon monoxide by all firms to exactly 4 million tons it could

• A) issue rights to pollute worth 4 million tons and let the firms trade those rights in a market.
• B) appeal to firms' environmental conscience to pollute less.
• C) subsidize production.
• D) rely on the Coase Theorem.

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Definitions:

Hindsight Bias

The tendency to believe, after an event has occurred, that one would have predicted or expected the outcome, even though it was not predictable.

Hindsight Bias

The inclination to see events that have already occurred as being more predictable than they were before they took place.

Interference

A cognitive process where previously learned information hinders the ability to learn new information or the retrieval of information due to the non-helpful interaction between different pieces of information.

Proactive Interference

The phenomenon where older memories interfere with the recall of newer memories, often causing confusion or mix-ups.