Question

Marketable permits are

legislative targets for reducing pollution by adopting specific practices or technology.

a Pigouvian tax on firms based on the amount of output they produce of a product that generates an externality.

a tax on firms based on the amount of effluents they produce rather than output.

a subsidy given to firms that reduce their pollution.

tradeable rights that allow the firms that hold them to emit a certain quantity of effluents per year.

If the EPA sets the quantity of permits correctly,

firms that have low costs to reduce pollution will have no economic incentive to do so.

it achieves the reduction in emissions it wants at minimal cost.

deadweight losses from the externality will increase.

every firm will reduce its pollution.

firms that need greater quantities of emissions to continue operating will be unable to get them.

Fishing-industry experts believe that the most efficient way to maintain fishing stocks is by

limiting harvests to specific days or times of the year.

limiting harvests to fish of a certain size.

introducing individually transferable quotas.

imposing overall quotas.

restricting the types of equipment that can be used.

Answer 1

Marketable permits are

Ans-
tradeable rights that allow the firms that hold them to emit a certain quantity of effluents per year.

If the EPA sets the quantity of permits correctly,

Ans –

it achieves the reduction in emissions it wants at minimal cost.

Fishing-industry experts believe that the most efficient way to maintain fishing stocks is by

Ans-

restricting the types of equipment that can be used.