What Is One Advantage of Allowing a Market for Pollution

question 172

Multiple Choice

What is one advantage of allowing a market for pollution permits to control the total amount of pollution released in an area

• 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 corrective 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:

Variable Cost

Expenses that shift in proportion to the amount of production or output.

Total Output

The total quantity of goods or services produced by a firm, industry, or economy in a given period.

Marginal Product

The extra yield generated when one additional unit of a particular input is used, keeping all other inputs unchanged.

Workers

Individuals or employees engaged in any form of labor, either paid or unpaid, within an economy.