Under the Clean Air Act of 1990, the EPA distributes pollution allowances to generators of electricity, and firms trade allowances as they see fit. The EPA's tradable allowances program has resulted in:
A) air quality that is neither improved nor worsened.
B) an improved air quality.
C) a worsening in air quality.
D) a less efficient market outcome.

Question

Quizplus · Accepted Answer

The EPA's tradable allowances program has resulted in an improved air quality. This is because the program creates a market incentive for companies to reduce their emissions or purchase allowances from those who have reduced their emissions. As a result, overall emissions are reduced, leading to improved air quality.

Under the Clean Air Act of 1990, the EPA Distributes