Question

With tradable emissions permits, the main problem is to determine the _____, while with emissions taxes the main problem is to determine the _____.

a. marginal social cost of pollution;
b. optimal tax rate optimal quantity of pollution;
c. optimal tax rate optimal quantity of pollution;
d. marginal social benefit of pollution optimal price of the permits;
e. optimal level of pollution

Answer 1

Answer: Optimal quantity of pollution; Optimal tax rate

Step-by-step explanation:

Option B states optimal tax rate and optimal quantity of pollution where the first blank should be optimal quantity of pollution and the second blank should be optimal tax rate.

Trade emission permits would obviously be talking about the emission of pollution through trade vehicles and the rule would permit a certain level of emission.

While the taxes would be about the optimal tax rate.