A Major Problem with Using a Tradable Emission Allowances System

question 32

Multiple Choice

A major problem with using a tradable emission allowances system to control pollution is

• A)that it grants firms a license to pollute.
• B)the difficulty in determining the emissions target.
• C)it discourages firms from implementing cost-effective pollution control technology.
• D)that it does not eliminate pollution completely.

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Definitions:

Fixed Costs

Expenses that do not change with the level of goods or services produced over the short term.

Sales Ratio

A metric that compares a particular figure or cost to the total sales, providing insight into various financial aspects of a business.

Variable Costs

Expenditures that fluctuate based on the volume of output or services provided by an enterprise.

Break-Even Point

The point at which total costs and total revenue are equal, leading to neither profit nor loss.