When tradable emissions permits are used,if the demand for goods that produce emissions shifts to the right,the equilibrium price of permits _____ and the equilibrium quantity _____.
A)decreases;increases
B)increases;stays the same
C)decreases;decreases
D)stays the same;increases

Question

Quizplus · Accepted Answer

If the demand for goods that produce emissions shifts to the right, this means that more emissions will be produced. In order to meet this increased demand, firms will need to purchase more permits, which will drive up the price of permits (increase). However, the increased demand will also result in an increase in the equilibrium quantity of permits traded. Therefore, the correct answer is B.

When Tradable Emissions Permits Are Used,if the Demand for Goods