If it costs Con Ed approximately $20 per additional ton of air pollution abated, but it costs PG&E only $10 per additional ton of air pollution abated and a marketable pollution permit trades for $14 per ton,
A. both PG&E and Con Ed could gain by buying.
B. PG&E could gain by buying and Con Ed could gain by selling.
C. both PG&E and Con Ed could gain by selling.
D. society would gain if PG&E would sell and Con Ed would buy.
Answer: D
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Under a fixed exchange rate regime, if a central bank must intervene to purchase the domestic currency by selling foreign assets, then, like an open market sale, this action ________ the monetary base and the money supply, causing the interest rate
on domestic assets to ________. A) increases; rise B) increases; fall C) reduces; rise D) reduces; fall
When a country has monetary autonomy, it can:
A) conduct monetary policy independently of all other countries. B) conduct monetary policy only in coordination with all other countries. C) conduct monetary policy only in cooperation with its reserve currency country (the country to which it fixes its currency). D) print money without affecting inflation.
Who is affected when a Pigouvian subsidy is imposed on a market with a positive externality?
A. Producers B. Those affected by the externality C. Consumers D. All of these groups would be affected.
What is intra-industry trade? Is intra-industry trade consistent with the predictions of the Heckscher-Ohlin theory? Explain, and relate your discussion to evidence about trade between industrialized countries and developing counties, and about trade among industrialized countries.
What will be an ideal response?