There is currently a surplus of allowance at the price of, Business Economics

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There is currently a surplus of allowance at the price of

1. There is currently a surplus of allowance at the price of zero. What must be true of the relative positions of the market demand and supply curves? Explain.

2. If the EPA were to allow firms to use allowances to emit sulfur dioxide as they did in the past, what would happen to the equilibrium allowance price? Why?

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