Pollution permit policies achieve an ________ outcome because ________.
A. efficient; firms that have the highest cost of reducing pollution will have the greatest incentive to purchase permits.
B. inefficient; the supply of permits is set by the government, and so is perfectly inelastic.
C. inefficient; wealthier firms can afford to purchase more permits.
D. efficient; firms that have the lowest cost of reducing pollution will be able to pay more for each permit.
Answer: A
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