Which Statement Explains the Difference Between Command and Control Policies

question 98

Multiple Choice

Which statement explains the difference between command and control policies and tradable allowances?

• A) Command and control policies are a government solution to externalities, whereas tradable allowances are a type of private market solution.
• B) Tradable allowances allow for less flexibility than command and control policies.
• C) Command and control policies require all firms to reduce pollutants by a specific quantity, whereas tradable allowances allow some firms to pollute more than others by trading for pollution rights.
• D) Tradable allowances sometimes result in higher overall levels of pollutants because firms can simply purchase the rights to pollute more, whereas the quantity of pollution is fixed under command and control.

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Definitions:

Negotiable Instruments

Financial documents that guarantee the payment of a specific amount of money, either on-demand or at a set time, to the holder of the instrument.

Nonconforming Goods

Goods delivered under a contract that fail to meet the specifications or quality standards agreed upon.

Conforming Goods

Items that meet the specifications and requirements agreed upon in a contract or specified by law, particularly in sale transactions.

Future Goods

Goods that are not currently in existence but are expected to be produced or acquired by the seller in the future.