Suppose a competitive market for tradable pollution permits is in equilibrium at
,with the quantity of permits being set by government policy at
.If technological advances reduce the marginal cost of pollution abatement,then
A) the equilibrium price of permits will fall below
.
B) the equilibrium price of permits will rise above
.
C) the equilibrium quantity of permits will fall below
.
D) the equilibrium quantity of permits will fall above
.
E) there will be no change in
or
.
Correct Answer:
Verified
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