The Government Prefers a Market-Based Approach to Reduce Firms' Emissions

Multiple Choice

The government prefers a market-based approach to reduce firms' emissions of a toxic gas but wants to make certain that no more than 1,000 cubic yards of the gas are ever emitted in a single day.The most efficient policy under these circumstances is likely to be a system of

A) per-unit taxes on emissions of the gas.
B) per-unit taxes on the goods produced by firms that emit the gas.
C) subsidies to firms that agree not to emit the gas.
D) sales of permits to emit specified quantities of the gas on specified days.