Tradable allowances may be a better solution to common-resource problems than quotas because tradable allowances:
A)allocate the good without government intervention.
B)ensure that the resource is allocated to those with the highest willingness to pay, while quotas do not.
C)are more equitable than quotas.
D)allow the government to set a specific amount of the good to be consumed, while quotas do not.

Question

Quizplus · Accepted Answer

Tradable allowances are designed to allocate resources efficiently by allowing those with the highest willingness to pay to obtain them. This market-based approach contrasts with quotas, which allocate resources without necessarily considering willingness to pay or efficiency.

Tradable Allowances May Be a Better Solution to Common-Resource Problems