Which of the following statements is correct?
A)The ideal solution to a pollution problem is to reduce pollution until it is technologically impossible to reduce it any further.
B)The ideal and fair solution to a pollution problem is to impose identical compliance standards on all polluting firms.
C)Charging firms for transferable emissions permits is a more efficient way of dealing with pollution than are compliance standards.
D)A per-unit pollution tax is a more efficient way of dealing with pollution than is a system of transferable emissions permits.

Question

Which of the following statements is correct?
A)​The ideal solution to a pollution problem is to reduce pollution until it is technologically impossible to reduce it any further.
B)​The ideal and fair solution to a pollution problem is to impose identical compliance standards on all polluting firms.
C)​Charging firms for transferable emissions permits is a more efficient way of dealing with pollution than are compliance standards.
D)​A per-unit pollution tax is a more efficient way of dealing with pollution than is a system of transferable emissions permits.

Quizplus · Accepted Answer

This statement is correct because charging firms for transferable emissions permits creates a market for pollution rights and incentivizes firms to reduce their own emissions if they can do so at a lower cost than purchasing additional permits. Compliance standards may not be as efficient because they do not provide firms with flexibility in how they reduce emissions, and identical standards may not be fair because different firms may have different abilities to reduce pollution. Option A is not ideal because it assumes that there is a limit to how much pollution can be reduced, whereas continued innovation and technological advancements may allow for further reductions. Option D is not the most efficient because a per-unit tax does not provide firms with flexibility in how they reduce emissions and may not incentivize reductions at the same level as transferable permits.

Which of the Following Statements Is Correct