A system of marketable permits is used to reduce acid rain caused by emissions from electric power utilities.Which of the following statements is true?
A)Market forces determine both the demand for marketable permits and their supply.
B)Public choice determines both the demand for marketable permits and their supply.
C)Market forces determine the demand for marketable permits, and property rights determine their supply.
D)Property rights determine the demand for marketable permits, and the government determines their supply.
E)Market forces determine the demand for marketable permits, and the government determines their supply.

Question

Quizplus · Accepted Answer

A system of marketable permits is a market-based solution to environmental issues, where companies are given a set of permits that allow them to emit a certain amount of pollutants. Companies that can reduce their emissions below their allocated permits can sell their unused permits to companies that need them. Therefore, market forces determine the demand for these permits, while the government determines their supply by setting a cap on the total number of permits available.

A System of Marketable Permits Is Used to Reduce Acid