Which of the Following Is the Best Definition of a Cap-And-Trade

question 88

Multiple Choice

Which of the following is the best definition of a cap-and-trade policy for pollution?

• A) The government sets a cap on emissions.Firms are given permits by the government to emit pollutants and have the right to trade the permits with each other.
• B) Emissions of a pollutant are capped by the government at the current level,and the good being produced can still be traded in the market.
• C) Production of the good is capped by the government at the current level,but the good can still be traded in the market.
• D) The number of firms producing a good is capped by the government at the current level,but the good can still be traded in the market.
• E) Consumption of the good being produced is capped by the government at the current level,but the good can still be traded in the market.