A Government Program Where Permits Are Issued for a Maximum

question 89

Multiple Choice

A government program where permits are issued for a maximum allowable amount of pollution and those permits can be bought and sold is called:

• A) a corrective tax.
• B) a corrective subsidy.
• C) cap and trade.
• D) nontradable pollution permits.

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Definitions:

Quantity Supplied

The amount of a good or service that producers are willing to sell at a particular price.

Price Ceiling

A government-imposed limit on the price charged for a product, intended to prevent prices from rising too high.

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, often due to market prices being higher.

Substitutes

Goods or services that can be used in place of each other, allowing consumers to switch if there is a change in price or availability.