In some cases, selling pollution permits is a better method for reducing pollution than imposing a corrective tax because
a. it is hard to estimate the market demand curve and thus charge the "right" corrective tax.
b. selling pollution permits create a net increase in pollution.
c. Corrective taxes distort incentives.
d. Corrective taxes provide greater flexibility to firms that can reduce pollution at a low cost.
a
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The economic way of thinking includes:
A) more attention paid to benefits rather than the costs involved in any choice. B) the assumption that individuals choose to maximize some objective. C) emphasis on how choices affect total values rather than marginal values. D) the notion that the world has solved the problem of scarcity.
Next year's expected price of oil is $90 per barrel. If the interest rate climbs from 5 percent to 20 percent per year and nothing else changes, then according to the Hotelling Principle the price of oil this year
A) will rise. B) will fall. C) will not change. D) could rise, fall, or stay the same.