Exhibit 17.6

-Refer to Exhibit 17.6,which shows the market for pollution rights.An increase in demand indicates ______
A)a fall in pollution.
B)reduced environmental damage.
C)an increase in the price of the right to pollute.
D)an increase in the benefit of cleaning up the pollution.
E)an increase in the cost of cleaning up the river.

Question

Exhibit 17.6
 
-Refer to Exhibit 17.6,which shows the market for pollution rights.An increase in demand indicates ______
A)a fall in pollution. 
B)reduced environmental damage. 
C)an increase in the price of the right to pollute. 
D)an increase in the benefit of cleaning up the pollution. 
E)an increase in the cost of cleaning up the river.

Quizplus · Accepted Answer

An increase in demand shifts the demand curve to the right, leading to an increase in the equilibrium price of pollution rights. This indicates an increase in the price of the right to pollute. It does not necessarily imply a fall in pollution, reduced environmental damage, an increase in the benefit of cleaning up the pollution or an increase in the cost of cleaning up the river.

Exhibit 17.6 -Refer to Exhibit 17.6,which Shows the Market for Pollution Rights.An