Homework Question

[tonythetiger]

Say the government establishes rights to pollute so that without a pollution permit you aren’t allowed to emit pollutants into the air, water, or soil. Firms are allowed to buy and sell these rights. In what way will this correct for an externality?

A.Pollution permits ban pollution thereby correcting for the externality.

B.Pollution permits force consumers to take into account the cost of pollution to polluters, thereby correcting for the externality.

C.Pollution permits allow society to gain revenue from polluters that can be used to clean up the pollution, thereby correcting for the externality.

D.The creation of pollution permits with a market forces polluters to take into account the cost of their pollution and assign rights, thereby correcting for the externality.

 

[007]

1). Define "pollution."

2). Define "pollution credit."

3). Are you a liberal or a conservative?