How could transferable pollution rights lead to pollution being reduced at the lowest possible opportunity cost?


A policy allowing tradable pollution rights encourages polluters to find cheaper ways to reduce pollution. A firm that is able to reduce its pollution levels can sell its remaining pollution credits to others. The supervising government agency does not need to be informed about the cheapest methods by which a firm can reduce its pollution output. Firms most capable of reducing emissions will do so. Firms with the highest opportunity costs of pollution abatement are likely to purchase rights to pollute from others. This promotes economic efficiency in the attainment of targeted pollution levels.

Economics

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The price elasticity of demand is a measure of

A) the equilibrium price of a product. B) buyers' responsiveness to changes in the price of a product. C) the amount of a product purchased when income increases. D) whether a product is a substitute or a complement. E) how much a change in demand affects the equilibrium price.

Economics

Refer to Figure 10-2. When the price of ice cream cones increases from $2 to $3, quantity demanded decreases from 4 ice cream cones to 3 ice cream cones. This change in quantity demanded is due to

A) the fact that marginal willingness to pay falls. B) the price and output effects. C) the law of diminishing marginal utility. D) the income and substitution effects.

Economics

Which of the following is NOT a nontransaction deposit?

A) a money market deposit account B) a certificate of deposit C) a savings account D) a NOW account

Economics

Refer to the following payoff matrix:Player 1Player 2??Low QHigh Q?Low Q$50,$5$15,$30?High Q$40,$2$2,$1The Nash equilibrium for the simultaneous-move game depicted in the payoff matrix is:

A. {(A,a)}. B. {B,b)}. C. {(A,a) and (A,b)}. D. There is no pure strategy Nash equilibrium to this game.

Economics