Because in any period of time and in any region the quantity of pollutants that can be absorbed by nature is fixed, the supply of "pollution rights" in a cap-and-trade system will be perfectly elastic (horizontal).

(A) True

(B) False

Question

Solomon Sutton

Business

29 June, 11:30

Because in any period of time and in any region the quantity of pollutants that can be absorbed by nature is fixed, the supply of "pollution rights" in a cap-and-trade system will be perfectly elastic (horizontal).

(A) True

(B) False

+2

Answers (1)

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Phoebe Key · Answer 1

The correct answer is (B) False.

Explanation:

When the government sets a tax to put a price on pollution, the curve is perfectly elastic, because companies can contaminate everything they want by paying the tax; on the other hand, when the government sets an amount of pollution by issuing pollution permits, the supply curve of pollution rights is perfectly inelastic, since the amount of pollution is set by means of the number of permits.

Because in any period of time and in any region the quantity of pollutants that can be absorbed by nature is fixed, the supply of "pollution rights" in a cap-and-trade system will be perfectly elastic (horizontal).(A) True(B) False

Because in any period of time and in any region the quantity of pollutants that can be absorbed by nature is fixed, the supply of "pollution rights" in a cap-and-trade system will be perfectly elastic (horizontal).

(A) True

(B) False