If the government creates a system of pollution permits, firms with low marginal costs of reducing pollution will
A) buy permits from other firms.
B) sell permits to other firms.
C) hold on to the permits they have been issued and not attempt to buy more.
D) not be issued permits.

Question

Quizplus · Accepted Answer

Firms with low marginal costs of reducing pollution can reduce pollution cheaply and sell their excess permits to firms with higher reduction costs.

If the Government Creates a System of Pollution Permits, Firms