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

Question

Quizplus · Accepted Answer

When the demand for goods that produce emissions decreases (shifts to the left), the demand for emissions permits also decreases, leading to a fall in the equilibrium price of permits. However, the total quantity of permits remains fixed, so the equilibrium quantity stays the same.

With Tradable Emissions Permits, If the Demand for Goods That