-Under a marketable permit system, if the government reduces the quantity of permits, the price of each permit will increase.

Question

Quizplus · Accepted Answer

Reducing the quantity of permits decreases the supply of permits in the market. According to the law of supply and demand, when the supply of an item decreases while demand remains the same, the price of that item tends to increase. Therefore, reducing the quantity of permits would lead to an increase in the price of each permit.

-Under a Marketable Permit System, If the Government Reduces the Quantity