How does the selling of pollution rights lead to a more efficient outcome?
What will be an ideal response?
The right to pollute is often beneficial to those who pollute. Firms will try to maximize profit by limiting their costs of production. Those firms who can limit pollution cheaply will not opt to purchase pollution permits, while those that face high costs to limit pollution will. Therefore, as long as firms weigh the benefits and costs of polluting (purchasing permits), the amount of pollution will be reduced to an efficient level.
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High skilled labor and information technology are ________ while low skilled labor and information technology are ________
A) complements; substitutes B) substitutes; substitutes C) substitutes; complements D) complements; complements
In Solow's exogenous growth model, the principal obstacle to continuous growth in output per capita is due to
A) the declining marginal product of labor. B) the declining marginal product of capital. C) limits in the ability of government policymakers. D) too little savings.