In regard to marketable pollution permits, if the number of pollution rights available is decreased, the equilibrium price _______ and the equilibrium quantity of emissions _______.

Question

Quizplus · Accepted Answer

If the number of pollution rights available is decreased, the supply of permits decreases. This causes an increase in the equilibrium price of permits. However, a decrease in the number of available permits also decreases the amount of pollution that can be emitted legally. This causes a decrease in the equilibrium quantity of emissions. Therefore, the correct answer is C: an increase in the equilibrium price and a decrease in the equilibrium quantity of emissions.

In Regard to Marketable Pollution Permits, If the Number of Pollution