Which of the Following Is an Advantage of Tradable Pollution

question 273

Multiple Choice

Which of the following is an advantage of tradable pollution permits?

• A)The government knows exactly how much each firm is allowed to pollute.
• B)Revenue from the sale of permits is greater than revenue from a corrective tax.
• C)The initial allocation of permits to firms does not affect the efficiency of the market.
• D)Firms will engage in joint research efforts to reduce pollution.

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Definitions:

Return on Investment

A measure of performance that evaluates the efficiency or profitability of an investment relative to its cost.

Selling Price

The amount of money a buyer pays to purchase a product or service.

Absorption Costing

An accounting method that includes both variable and fixed manufacturing overhead costs in the cost of a product.

Cost-plus Pricing

A pricing strategy where the selling price is determined by adding a specific markup to a product's cost.