In an allowance market, buyers will purchase allowances as long as the price is higher than their MAC, which results in a cost-effective solution.

Question

Quizplus · Accepted Answer

In an allowance market, buyers will only purchase allowances if the price is lower than their MAC. This is because the MAC represents the cost of reducing emissions through other means, so it makes sense for buyers to only purchase allowances when it is more cost-effective than these other options. Therefore, the statement in the question is incorrect.

In an Allowance Market, Buyers Will Purchase Allowances as Long