Answer:
b. decreases; increases
Step-by-step explanation:
Tradable pollution permits are also cap and trade schemes. They give firms a legal right to pollute upto a particular level, per set, per period. Companies that pollute less can trade their unused pollution permits to organizations that pollute more.
Like many other commodities, the prices tradable pollution permits will be determined by the intersection of supply and demand curves. At equilibrium quantity, supply equal demand. The equilibrium price is the prevailing market price.
An increase in available tradable emissions permits means an increase in the supply side. An increase in the quantity supplied shifts the supply curve the right. More goods in the market mean sellers are more than the buyers, which reduces the demand. A decrease in demand pushes the downwards.