The Share of the Burden of an Emissions Tax on Output

question 37

Multiple Choice

The share of the burden of an emissions tax on output borne by the consumer of the polluting output will rise as

• A)the tax rises.
• B)demand elasticity falls.
• C)demand elasticity rises.
• D)the tax falls.

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Definitions:

Marking To Market

This refers to the daily adjustment of accounts to reflect profits and losses in the value of securities.

Option Contract

A financial contract that gives the buyer the right, but not the obligation, to buy or sell an asset at a specified price on or before a specified date.

Derivative Security

A financial instrument whose value is based on the value of another asset.

Economic Exposure

Long-term financial risk arising from permanent changes in prices or other economic fundamentals.