One Advantage of Allowing a Market for Pollution Permits to Control

question 167

Multiple Choice

One advantage of allowing a market for pollution permits to control the total amount of pollution released in an area is that:

• A)the government knows exactly how much each firm is allowed to pollute
• B)government revenue from the sale of permits is greater than revenue from a Pigovian tax
• C)the initial allocation of permits to firms does not affect the efficiency of the market
• D)firms will work together to eventually eliminate pollution

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Definitions:

Decision Variable Range

The set of possible values that a decision variable can take in mathematical modeling and optimization problems.

Decision Variables

Variables in a mathematical model that decision-makers control in order to achieve the best solution to an optimization problem.

Constraint Function

Mathematical equations that express the limitations or requirements that must be satisfied in an optimization problem.

Inequality

A condition that arises when wealth, opportunities, or rights are unevenly distributed among individuals or groups.