In principle, a cap-and-trade program would

Question

Quizplus · Accepted Answer

A cap-and-trade program sets a limit (cap) on the total amount of pollution that can be emitted by participating firms. The cap is then divided into individual allowances that can be bought and sold (traded) among the firms. This creates a market for pollution, where firms that can reduce their emissions at a lower cost can sell their allowances to firms that cannot. This system incentivizes firms to reduce their emissions and can lead to overall reductions in pollution below the cap level. Therefore, choice B, "cause firms to generate less pollution than their allowed limits" is the correct answer.

In Principle, a Cap-And-Trade Program Would