When tradable emissions permits are used, if the demand for goods that produce emissions shifts to the right, the equilibrium price of permits _____ and the equilibrium quantity _____.
A) falls; increases
B) increases; stays the same
C) falls; falls
D) stays the same; increases

Question

Quizplus · Accepted Answer

When demand for goods that produce emissions increases, the demand for permits also increases, leading to a higher equilibrium price. However, the quantity of permits is fixed, so the equilibrium quantity remains the same.

When Tradable Emissions Permits Are Used, If the Demand for Goods