Question

Which is a wrong explanation on market mechanisms (cap and trade)?   A) A 'cap' is set...

Which is a wrong explanation on market mechanisms (cap and trade)?  

A) A 'cap' is set on an individual allowable emission

B) Permit to emit greenhouse gases are distributed to emitters

C) Some firms will need more permits, and so will have to buy

D) Other firms will find it easier to reduce their emissions, and so will have permits to sell

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Answer #1

a) A cap is set to limit total level of emissions of certain chemicals, particularly carbon dioxide, as a result of industrial activity.

So statement "A 'cap' is set on an individual allowable emission" is wrong.

The other statements are correct explanation of cap and trade.

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