If the government regulator has chosen a target level of total emissions to be 400 units per year,________ permits will need to be issued and they will trade for ________ per permit.
A)100;$200
B)100;$120
C)400;$200
D)400;$120

Question

Quizplus · Accepted Answer

If the target level of emissions is 400 units per year and the government regulator is implementing a cap-and-trade system, then 400 permits will need to be issued. The trading price per permit will depend on the market demand and supply conditions. However, given the information in the question, we can assume that the market price will need to be at least equal to the government's target price. Therefore, the best choice is D, where 400 permits will be issued and they will trade for $120 per permit, resulting in $48,000 in total revenue for the government.

If the Government Regulator Has Chosen a Target Level of Total