There are two industries that emit sulfur dioxide. The government ...

[Frost2351]

There are two industries that emit sulfur dioxide. The government decides to use a cap-and-trade policy by issuing permits for pollution. If Harry's industry has a higher marginal cost of reducing sulfur dioxide than does Joe's industry, ________.
 
  A) the cap-and-trade policy will not make the amount of pollution efficient
  B) Joe's industry will sell permits to Harry's industry
  C) Harry's industry will sell permits to Joe's industry
  D) Harry's industry and Joe's industry will emit the same quantity of sulfur dioxide

Question 2

The above figure shows the utility of wealth curve for a homeowner whose only possession is a 50,000 house. If there is a 20 percent chance that the home could be entirely destroyed, what is the person's cost of risk?
 
  A) 10,000
  B) 20,000
  C) 30,000
  D) 40,000

[Smiles0805]

Answer to Question 1

B

Answer to Question 2

A

[Frost2351]

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