A system of transferable pollution rights:
a. increases the quantity of pollution generated.
b. provides firms with an incentive to develop new pollution-abatement technologies.
c. is not as cost-effective in reducing pollution as a system based on compliance standards.
d. is characterized by none of the above.
Question 2
Which of the following statements is true of the impact of trade restrictions on domestic employment?
a. Domestic firms will produce the goods that otherwise would have been produced abroad, thus employing foreign workers instead of domestic workers.
b. Beside the protected industry, other industries will also benefit in terms of employment.
c. Domestic consumers will be required to pay lower prices for the output of the protected industry.
d. Restrictions imposed on trade simply redistribute jobs by creating employment in the protected industry and reducing employment elsewhere.
e. If other countries retaliate by restricting the entry of the domestic exports, the output of domestic firms that produce for export will rise.
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