A Government Passes a New Law Allowing Only 1,000 Tons

question 168

Multiple Choice

A government passes a new law allowing only 1,000 tons of pollution per day to be generated and simultaneously sells 1,000 transferable rights to emit one ton each of pollution per day. Which of the following is true?

• A) The pollution will be created by those least willing and able to pay the damages.
• B) The pollution will be created by those most willing and able to pay for the right to pollute.
• C) The funds collected by the government will be enough to compensate any individuals harmed by the pollution.
• D) Pollution will increase from zero to 1,000 units per day.
• E) There will be no incentive for polluters to try to sneak emissions past government monitoring devices.

Identify the impact of external factors such as natural disasters and seasonal changes on market equilibrium.

Differentiate between shifts in demand and supply versus movements along the demand and supply curves.

Analyze the effects of complementary and substitute goods on market dynamics.

Recognize the role of consumer expectations and preferences in shaping market demand.