Using Tradable Allowances Instead of Quotas May Be a Better

question 77

Multiple Choice

Using tradable allowances instead of quotas may be a better solution to the provision of common resources because they:

• A) allocate the good in a less efficient way, and quotas do not.
• B) ensure that the resource is allocated to those with the highest willingness to pay, while quotas do not.
• C) assign private property rights-and an incentive, as owners, which means common resource now get overused, and quotas do not.
• D) allow the government to set a specific amount of the good to be consumed, while quotas do not.

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Definitions:

Equivalent Interest Rate

A rate that provides the same accumulated interest as would be obtained from several other interest rates over a given time period.

Nearest 0.01%

Adjusting a value so that it is close to an exact hundredth of a percent, enhancing precision.

Nearest 0.01%

An accuracy level in calculations where the result is rounded to the closest one-hundredth of a percent.

Equivalent Interest Rate

A rate that equates two or more interest arrangements by taking into account compounding periods and other terms.