In Figure 3, We Have Two Veto Players, a and B

question 19

Multiple Choice

In Figure 3, we have two veto players, A and B, who are located in a two-dimensional issue space. The status quo policy is given by the point SQ. Potential policy proposals are denoted by X.
Figure 3: Two Veto Players

-If Figure 3 remained the same except that A were no longer a veto player-that is, if B could choose policy independently, where would policy end up?

• A) X₁
• B) X₂
• C) X₃
• D) X₄
• E) A
• F) B
• G) SQ

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Definitions:

Pollution Rights

Permits or allowances that authorize the holder to emit a certain amount of a pollutant, used in regulatory approaches to manage environmental impacts.

Supply Curve

A graphical representation of the relationship between the price of a good and the quantity of the good that suppliers are willing and able to sell.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase at various prices.

Externality Problem

A situation where the actions of individuals or firms result in costs or benefits to others that are not reflected in the market prices.