A Cap and Trade System

question 167

Multiple Choice

A cap and trade system:

• A) reduces climate change by requiring individuals and firms to buy licenses to emit greenhouse gases.
• B) encourages fair trade by limiting the amount of many vegetables that can be imported from Mexico.
• C) was used in nineteenth-century England to limit coal consumption.
• D) exempts Chinese imports from Food and Drug Administration regulations.

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Definitions:

Short Run

Short Run is a time period in economics during which at least one input is fixed while others are variable.

Fixed Input

A factor of production that cannot be easily increased or decreased in the short term, such as land or machinery.

Short Run

A period in which at least one input in the production process is fixed, limiting the ability of the firm to adjust production levels.

Variable Costs

Outlays that shift in tandem with the quantity of goods produced.