In principle, a cap-and-trade program would
A) cause firms to generate more pollution than their allowed limits.
B) cause firms to generate less pollution than their allowed limits.
C) raise the production costs of all firms.
D) lower the production costs of all firms.
Answer: B
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Refer to Scenario 3 . Compare and discuss the two elasticity estimates computed above
Without doing any more calculations what would you expect to happen to the value of the elasticity estimates as price continues to fall? Assume a linear demand curve.
Marginal cost:
A. equals both average variable cost and average total cost at their respective minimums. B. declines continuously as output increases. C. is the difference between total cost and total variable cost. D. rises for a time but then begins to decline when diminishing returns set in.