Why would a new limit on trade in goods with the United States by Canada be more important to the U.S. economy than the same type of policy in Italy?
a. Canadians speak English so U.S. citizens are more interested in what they do.
b. Canada has greater natural resource access than the U.S.
c. Canada is one of the U.S.' largest trading partners.
d. Canada uses the U.S. dollar as an official currency.
Question 2
Factory A can reduce emissions at a cost of 400 per ton. Factory B can reduce emissions at a cost of 100 per ton. In a system in which the government issues transferable pollution right at a price of 200 per ton:
a. Factory A can profit from selling its pollution rights to Factory B.
b. Neither firm can profit from selling its pollution rights to the other.
c. Factory B can profit from selling its pollution rights to Factory A.
d. Both firms have an incentive to sell pollution rights.
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