A Cap-And-Trade Policy Is an Efficient Method of Reducing Pollution

question 17

Multiple Choice

A cap-and-trade policy is an efficient method of reducing pollution because

• A) all firms will be forced to reduce pollution.
• B) only high-cost firms will be forced to reduce pollution.
• C) only low-cost firms will be forced to reduce pollution.
• D) those who can reduce pollution relatively more cheaply will have an incentive to buy permits.
• E) those who can reduce pollution relatively more cheaply will have an incentive to sell permits.

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Definitions:

Initial Price

The first set price of a product or service at the start of its market launch, before any discounts or adjustments.

Selective Distribution

A marketing strategy where a product is distributed through a limited number of channels or retailers to maintain exclusivity.

Juicy Fruit

A brand of chewing gum produced by the Wrigley Company, characterized by its sweet, fruity flavor.

Elastic Product

A product whose demand is highly sensitive to changes in price, meaning small price changes can result in significant changes in quantity demanded.