Suppose environmental groups pressure the local government to reduce the number of pollution rights to be sold.Other things equal,
A)pollution would not be affected
B)the price of pollution rights would rise, and the amount of pollution would decrease
C)the price of pollution rights would fall, and the amount of pollution would decrease
D)the price of pollution rights would fall, and the amount of pollution would increase
E)the price of pollution rights would rise, and the amount of pollution would increase

Question

Quizplus · Accepted Answer

If the number of pollution rights is reduced, the supply of pollution rights will decrease. This will lead to an increase in the price of pollution rights. As the price of pollution rights increases, firms will have to pay more to pollute. This will lead to a decrease in the amount of pollution.

Suppose Environmental Groups Pressure the Local Government to Reduce the Number