With tradable emissions permits,the main problem is determining the _____,while with emissions taxes,the main problem is determining the _____.
A)optimal quantity of pollution;optimal tax rate
B)optimal price of the permits;optimal level of pollution
C)optimal quantity of pollution;marginal social benefit of pollution
D)marginal social cost of pollution;optimal tax rate

Question

Quizplus · Accepted Answer

With tradable emissions permits, the main objective is to determine the optimal quantity of pollution that should be allowed. This determines the number of permits that should be issued and traded. On the other hand, with emissions taxes, the main objective is to determine the optimal tax rate that will lead to the desired reduction in pollution levels. The tax rate could be set based on the marginal social cost of pollution or to achieve a certain level of pollution reduction.

With Tradable Emissions Permits,the Main Problem Is Determining the _____,While