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Economics Mcqs
Q
Which of the following is true regarding tradable pollution permits and Pigouvian taxes ?
AA. All of these answers are true
BB. Pigouvian taxes and tradable pollution permits create an efficient market for pollution.
CC. Tradable pollution permits efficiently reduce pollution only if they are initially distributed to the firms that can regulator pollution at the lowest cost.
DD. To set the quantity of pollution with tradable pollution permits, the regulator must know everything about the demand for pollution rights.
Correct Answer:
B. B. Pigouvian taxes and tradable pollution permits create an efficient market for pollution.
