(Last Word) in a Cap-And-Trade Program

question 74

Multiple Choice

(Last Word) In a cap-and-trade program,

• A) government fixes the price of pollution rights and firms choose how many permits to purchase.
• B) government fixes the maximum amount of a pollutant that firms can discharge and issues permits that firms can buy from and sell to each other.
• C) each firm is provided a fixed number of permits for a particular pollutant and no individual firm is allowed to acquire additional permits.
• D) firms can emit whatever type of pollutant they want, so long as the total tonnage does not exceed a government-established quantity.

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Definitions:

Market Price

The price at which a good or service is offered in the marketplace, determined by supply and demand dynamics.

Units

Basic measurement or quantity of a product, used to track inventory, production, and sales in various contexts.

Total Revenue

The entire amount of income received by a firm from selling its goods or services before any expenses are deducted.

Total Cost

The sum of fixed and variable costs incurred by a firm in producing and offering a product or service for sale.