Describe the idea behind the cap-and-trade program for improving environmental quality. Explain how supply and demand determine the price for pollution rights in this case
Please provide the best answer for the statement.
The cap-and-trade program is a market-based approach for improving air or water quality. An appropriate pollution-control agency determines the amount of pollutants that firms can discharge annually into the water or air of a specific region while maintaining the water or air quality at some acceptable level. Then the rights to pollute are made available for sale each year. The quantity of these pollution rights is capped so that the supply is perfectly elastic. The down sloping demand curve in combination with the inelastic supply determines the price for these rights. At higher prices, fewer pollution rights are demanded since firms substitute pollution-abatement equipment for pollution rights. Over time, as demand increases, so would the price for these rights; however, the amount of pollutants would remain at the predetermined level.
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If the government announces a cut in the capital gains tax and it is expected that investment spending will increase as a result, which of the following are also likely?
a. An upward shift in the aggregate expenditure line, a rightward shift of the money demand curve, and a leftward shift of the aggregate demand curve b. A downward shift in the aggregate expenditure line, a rightward shift of the money demand curve, and a rightward shift of the aggregate demand curve c. An upward shift in the aggregate expenditure line, a leftward shift of the money demand curve, and a rightward shift of the aggregate demand curve d. A downward shift in the aggregate expenditure line, a leftward shift of the money demand curve, and a leftward shift of the aggregate demand curve e. An upward shift in the aggregate expenditure line, a rightward shift of the money demand curve, and a rightward shift of the aggregate demand curve.
If consumers' expectations about future income are very optimistic, then we should expect
a. the consumption function to shift downward. b. consumers to move up along the consumption function. c. the consumption function to shift upward. d. consumers to move down along the consumption function.
The income approach to measuring GDP ________.
A. focuses on how income is spent B. uses the payments paid to the four resources used to produce goods and services to estimate GDP C. adds up all household expenditures to calculate aggregate income and GDP D. ignores how income is earned and focuses instead on how it is used
Pharmaceutical companies receive patents as an exclusive right to produce a drug. This results in:
a. orphan drug status. b. monopoly rights in the production of the drug. c. normal profits on the patented drug. d. fewer new chemical compounds discovered. e. lower prices for patients requiring the drug.