If the number of available cap and trade permits is decreased, the equilibrium price of the permits _____, and the equilibrium quantity of emissions _____.

Question

Quizplus · Accepted Answer

If the number of available permits is decreased, the supply of permits decreases. This causes an increase in price and a decrease in quantity demanded, shifting the equilibrium towards a higher price and lower quantity of permits. This, in turn, leads to a decrease in the quantity of permitted emissions.

If the Number of Available Cap and Trade Permits Is