A government passes a new law allowing only 1,000 tons of pollution per day to be generated and simultaneously sells 1,000 transferable rights to emit one ton each of pollution per day. Which of the following is true?
a. The pollution will be created by those least willing and able to pay the damages.
b. The pollution will be created by those most willing and able to pay for the right to pollute.
c. The funds collected by the government will be enough to compensate any individuals harmed by the pollution.
d. Pollution will increase from zero to 1,000 units per day.
Question 2
When a check is cleared against Bank A after being deposited at Bank B, _____.
a. both Bank A's and Bank B's liabilities increase
b. both Bank A's and Bank B's liabilities decrease
c. Bank A's liabilities increase and Bank B's liabilities decrease
d. Bank A's liabilities decrease and Bank B's liabilities increase
e. there is an increase in the liabilities of the Federal Reserve
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