Why is it misleading to argue that emissions permits are a “license to pollute”?
What will be an ideal response?
Critics of emissions trading fail to understand that the number of emissions permits constrains the amount of pollution. If the government wishes to reduce pollution by 50 percent, it reduces the number of licenses accordingly. Emissions trading is no more a license to pollute than command and control or taxes. It is just an alternative, and a more efficient way of meeting a goal of lower pollution.
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If a good that generates negative externalities were priced to take these negative externalities into account, its
A. price would remain constant and output would increase. B. price would increase but its output would remain constant. C. price would increase, and its output would decrease. D. price would decrease, and its output would increase.
How do economists define efficiency? Elaborate.
What will be an ideal response?
The long-run supply curve of an industry equals the industry’s
A. long-run marginal cost curve. B. the horizontal sum of all firms’ supply curves at any point in time. C. long-run average cost curve. D. long-run total variable cost curve.
Refer to the information provided in Figure 27.2 below to answer the question(s) that follow.
Figure 27.2Refer to Figure 27.2. Firms respond to an increase in government spending by mostly increasing output when the aggregate demand curve shifts from
A. AD1 to AD2. B. AD3 to AD4. C. AD5 to AD6. D. AD6 to AD1.