1. Firm A emits 200 tons of pollution and firm B emits 150 tons of pollution. Assume that the government issues 300 tradable permits (with one permit allowing for one ton of pollution). Each firm receives 150 tradable permits. Firm B will
a. sell 150 permits b. buy 150 permits c. sell 50 permits d. buy 50 permits.
2. Firm A emits 200 tons of pollution and firm B emits 150 tons of pollution. Suppose that the government issues 300 tradable permits (with one permit allowing for one ton of pollution). Firms A and B receive 200 and 100 respectively of the 300 tradable permits. Firm A will
a. sell 50 permits b. buy 50 permits c. sell 0 permits d. buy 0 permits.
3. Firm A emits 200 tons of pollution and firm B emits 150 tons of pollution. Suppose that the government issues 300 tradable permits (with one permit allowing for one ton of pollution). Firms A and B receive 200 and 100 respectively of the 300 tradable permits. Firm B will need to
a. increase its current pollution level by 50 tons b. decrease its current pollution level by 50 tons. c. increase its current pollution level by 150 tons d. decrease its current pollution level by 150 tons.
4. Would the annual pollution tonnage emitted by firm A (or for that matter firm B) with the tradable permit system differ from its pollution tonnage with an efficient outcome emissions fee?
a. Same tonnage. b. Different tonnage c. insufficient information for a definite conclusion.