The following graph shows the market for pollution rights. An increase in demand indicates ______.
Figure 17.4

A)a rise in pollution
B)increased 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

The following graph shows the market for pollution rights. An increase in demand indicates ______.​ ​
Figure 17.4
​

A)a rise in pollution 
B)increased 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 for pollution rights indicates an increase in the price of the right to pollute. This occurs because demand for pollution rights will push up the market price of these rights as there are only a limited number of them available, leading to a more expensive right to pollute. This does not necessarily imply that pollution will increase, as firms may choose to reduce the amount they pollute in response to the higher cost.

The Following Graph Shows the Market for Pollution Rights