How are cap-and-trade schemes designed to reduce emissions?
What will be an ideal response?
A cap-and-trade scheme is a market-based approach to setting the quantity of pollution to the socially optimal level. Polluting firms are given a number of "permits" for pollution, usually based on their historical levels of pollution. Firms that find it relatively cheaper to reduce pollution would do so and sell their extra permits to firms that find it expensive to reduce pollution. Becausethe number of permits is fixed, total emissions cannot exceed a certain level. Under cap-and-trade schemes, the marginal cost of pollution abatement is equalized across firms.
A-head: ECONOMICS OF THE ENVIRONMENT
Concept: Cap-and-trade schemes
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Which of the following statements is true?
A) Corporations can issue stocks and bonds, while proprietorships cannot. B) Proprietorships have limited liability while corporations have unlimited liability. C) Corporations have one owner, while proprietorships have many owners. D) Corporations face fewer taxes than do proprietorships.
Refer to Figure 18-1. Suppose that the U.S. government deficit decreases, causing interest rates in the United States to fall relative to those in the European Union. Assuming all else remains constant, how would this be represented?
A) Supply would increase, demand would increase and the economy moves from D to A to B. B) Supply would decrease, demand would increase and the economy moves from A to D to C. C) Demand would increase and the economy moves from A to B. D) Demand would decrease and the economy moves from B to A.
By mid-century, American workers benefited by state regulations providing for
a. a minimum wage in manufacturing. b. pensions for long-term employees. c. a ten-hour upper limit on the work day. d. periodic breaks for workers during the work day. e. All of the above.
The circular flow model illustrates that aggregate spending in the product markets equals 70 percent of aggregate income earned in the factor markets
a. True b. False Indicate whether the statement is true or false