If technological advancements reduce the cost of pollution abatement, all else equal
A) the price of a pollution permit will fall.
B) the price of a pollution permit will increase.
C) the government will be forced to issue more permits.
D) the government will be forced to issue fewer permits.

Question

Quizplus · Accepted Answer

When technological advancements reduce the cost of pollution abatement, it becomes less expensive for firms to reduce their emissions. This, in turn, reduces the demand for pollution permits since firms will require fewer permits to comply with regulations. Thus, the price of pollution permits will fall to reflect the decreased demand.

If Technological Advancements Reduce the Cost of Pollution Abatement, All