Tradable Permits That Establish a Maximum Amount of Pollution and Then

question 84

Multiple Choice

Tradable permits that establish a maximum amount of pollution and then allow firms to trade pollution quota permits among them:

• A)works most efficiently if the polluting industries are dominated by a large firm.
• B)tend to work better than taxes but only when the government originally allocates the permits to the biggest polluters.
• C)tend to not work because firms don't have an incentive to minimize their pollution.
• D)tend to work better than taxes because firms with higher costs of eliminating pollution buy permits from firms with lower costs of eliminating pollution.

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Definitions:

Disaffirm

Disaffirm refers to the legal act of renouncing or nullifying a contract or agreement, especially employed when one party to the agreement is not capable of fully understanding their obligations due to age or mental state.

Good Faith

Acting with honesty, fairness, and without deceit or fraud in transactions or interactions.

Emancipated

Refers to a legal process through which a minor gains legal independence from their parents or guardians before reaching adulthood.

Disaffirmance

The legal act of rejecting or voiding a contract or agreement, especially by one party who was a minor at the time of entering the contract.