When Marketable Pollution Permits Are Used, If the Demand for Emissions

question 82

Multiple Choice

When marketable pollution permits are used, if the demand for emissions shifts to the right, the equilibrium price of permits _______ , and the equilibrium quantity _______ .

• A) falls; increases
• B) increases; stays the same
• C) falls; falls
• D) stays the same; increases

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Definitions:

Budget Line

A visual depiction of every potential pair of two products a consumer is able to buy based on their earnings and the costs of these items.

Utility Function

A mathematical representation of how different quantities of goods or services translate into levels of happiness or satisfaction for an individual or society.

Utility Function

A mathematical representation that assigns a value to every possible choice to indicate the level of satisfaction or utility that choice provides to a consumer.

Demand

The quantity of a good or service that consumers are willing and able to purchase at a given price over a specified period of time.