What Is a Cap-And-Trade Policy? (Be Certain to Mention Marketable

question 309

Essay

What is a cap-and-trade policy? (Be certain to mention marketable permits.) Suppose there are two firms in an area, each emitting tons of sulfur. The government decides on a target level of 200 tons of sulfur, and gives each firm a permit to emit 100 tons of sulfur. Suppose Firm A is very efficient and can reduce pollution by 100 tons with an abatement cost of $500. Firm B has an older plant, so it will cost Firm B $1,000 to reduce emissions by 100 tons. What will occur with marketable permits?

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Definitions:

OLED TVs

Televisions that use Organic Light-Emitting Diodes for a better display with higher contrast, deeper blacks, and a wider viewing angle compared to traditional LCDs.

LCD TVs

Liquid Crystal Display Televisions, a technology for displaying images.

Opportunity Cost

The next best alternative forgone as the result of making a decision.

LCD Televisions

Televisions that use liquid crystal displays to produce images, known for their slim profiles and energy efficiency compared to older technologies.