The price of a pollution right is
A)determined by consumers
B)determined by government
C)a user charge
D)determined by supply and demand
E)a subsidy

Question

Quizplus · Accepted Answer

The price of a pollution right is determined by supply and demand, as it is essentially a commodity that can be traded on a market. The government may set a cap on the total amount of pollution that can be emitted, but the actual price of the rights will be determined by market forces. Consumers do not play a direct role in determining the price of pollution rights, although they may indirectly influence demand through their behavior and preferences. A user charge is a fee paid by users of a public good or service, and while pollution rights can be thought of as a type of user charge, they are not determined solely by this mechanism. A subsidy is the opposite of a user charge, in which the government provides financial assistance to producers or users of a good or service, and is not directly related to pollution rights.

The Price of a Pollution Right Is