Assume That the Price of a Tradable Emissions Permit for a Tonne

question 128

Multiple Choice

Assume that the price of a tradable emissions permit for a tonne of sulphur dioxide is $150.Which statement is INCORRECT?

• A) A firm that buys permits has an incentive to limit pollution to the point at which the marginal benefit of emissions is equal to $150.
• B) A firm that has more permits than it plans to use has an incentive to limit pollution to the point at which the marginal benefit of emissions is equal to $150.
• C) The opportunity cost of emitting a tonne of sulphur dioxide is $75 for all firms.
• D) The opportunity cost of emitting a tonne of sulphur dioxide is $150 for all firms.

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Definitions:

Rodney King

An African American man whose 1991 brutal beating by Los Angeles police officers was captured on video and led to widespread riots and discussions about police brutality and racial injustice.

Los Angeles

A major city in California, known for its entertainment industry, diverse population, and as a leading hub for businesses in the Pacific Rim.

Latinos

People in the United States who originate from, or have ancestry connected to, Latin American countries and cultures.