Under a System of Transferable Pollution Rights, Which of the Following

question 183

Multiple Choice

Under a system of transferable pollution rights, which of the following firms is most likely to purchase a $500 permit to emit a ton of pollutants in to the atmosphere?

• A)​a non-polluting firm
• B)​a polluting firm that can reduce emissions at a cost of $500 per ton
• C)​a polluting firm that can reduce emissions at a cost of $200 per ton
• D)​a polluting firm that can reduce emissions at a cost of $600 per ton

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Definitions:

Economic Profit

The difference between total revenues and total costs, taking both explicit and implicit costs into account, indicating the additional income over the opportunity cost of capital.

Industry Z

An unspecified sector of the economy, used as a placeholder to discuss economic concepts without specifying an industry.

Output Expansion

The increase in the production of goods or services by a firm or economy over time.

Market Entry

The strategy or process of introducing new products or services into an existing or new market.