Exhibit 17.6

-Refer to Exhibit 17.6,which shows the market for pollution rights.Which of the following could not have caused an increase in the demand for pollution rights?
A)an increase in the number of polluting firms
B)an improvement in the ability of the river to absorb pollutants
C)a decrease in the cost of pollution abatement equipment
D)the ability of existing firms to sell pollution rights at a price lower than the market price.
E)the subsidy provided by the government on the price of pollution rights

Question

Exhibit 17.6
 
-Refer to Exhibit 17.6,which shows the market for pollution rights.Which of the following could not have caused an increase in the demand for pollution rights?
A)an increase in the number of polluting firms 
B)an improvement in the ability of the river to absorb pollutants 
C)a decrease in the cost of pollution abatement equipment 
D)the ability of existing firms to sell pollution rights at a price lower than the market price. 
E)the subsidy provided by the government on the price of pollution rights

Quizplus · Accepted Answer

A decrease in the cost of pollution abatement equipment would likely reduce the demand for pollution rights, as firms would find it cheaper to reduce pollution rather than buy rights.

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