Economists Generally Favor the Use of Tradable Emissions Allowances to Reduce

question 92

Multiple Choice

Economists generally favor the use of tradable emissions allowances to reduce pollution. However, the use of these allowances has been criticized by some environmentalists. Which of the following describes this criticism?

• A) Some environmentalists believe the allowances give firms a license to pollute.
• B) Some environmentalists believe that the price of allowances is often too high for consumers to afford.
• C) Some environmentalists believe that Pigovian taxes are a more efficient way to reduce pollution.
• D) Some environmentalists oppose allowances on legal grounds; they believe the use of allowances is unconstitutional.

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Definitions:

Quick Ratio

A measure of a company's ability to meet its short-term obligations with its most liquid assets, without relying on inventory.

Current Liabilities

Obligations or debts that a company is expected to pay within a year.

Assets

Resources owned or controlled by a business, viewed as providing future economic benefits.

Profitability

A measure of how much profit a business generates compared to its revenue or assets, indicating financial success.