Figure 10-15 -Refer to Figure 10-15. Which of the Following Is Not

question 208

Multiple Choice

Figure 10-15
-Refer to Figure 10-15. Which of the following is not necessary in order for the corrective tax and pollution permit to have equivalent effects?

• A) PB must be equivalent to the corrective tax.
• B) QA must be equivalent to the amount of pollution allowed to the pollution permit holders.
• C) The equilibrium price and quantity of pollution must be the same in both graphs.
• D) The amount of pollution emitted by each firm must be the same.

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Definitions:

Variance

A statistical measure of the dispersion of returns for a given security or market index.

Elasticity

A measure of how much the demand or supply of a product changes in relation to a change in one of its determinants like price.

Hedge Ratio

A ratio used to reduce financial risk, representing the proportion of a position hedged to the total position size.

Hedge Ratio

The ratio used to manage risk in financial portfolios, determining the size of a position required to offset potential losses.