In Equilibrium, the Price of a Transferable Emissions Permit

Multiple Choice

In equilibrium, the price of a transferable emissions permit:

A) is constrained to the amount the government first charged for it.
B) equals the marginal cost of abatement for all firms.
C) equals the marginal cost of abatement for the firm with the highest cost, and exceeds the marginal cost of abatement of other firms.
D) equals the marginal cost of abatement for the firm with the lowest cost, and is less than the marginal cost of abatement of other firms.
E) equals the marginal social cost of emissions.