To Reduce the Level of Pollution Emitted by Firms in an Industry,the

question 107

Multiple Choice

To reduce the level of pollution emitted by firms in an industry,the government could use a cap-and-trade policy or a carbon tax (where the government taxes carbon producers based on the amount of carbon produced) .Which of the following is true?

• A) The price of the good sold will rise with the carbon tax policy,but not with the cap-and-trade policy.
• B) The quantity of the good sold will fall with the carbon tax policy,but not with the cap-and-trade policy.
• C) The price of the good sold will rise under either policy,but there will be no change in the level of production.
• D) The quantity of the good sold will fall under either policy,but there will be no change in the price of the good.
• E) The price of the good sold will rise under either policy,and there will be a reduction in the level of production.

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Definitions:

Cost

The amount of money required to purchase, produce, or maintain something.

Markup Percent

The extra portion put on the cost of items to cover the expenses of operation and achieve profit.

Selling Price

The amount for which something is sold, making it the price a buyer pays to acquire a product or service.

Markup Percent

The proportion added onto the purchase price of products to account for overhead costs and gain a profit.