When the Number of Tradable Allowances Is Set Equal to the Efficient

Multiple Choice

When the number of tradable allowances is set equal to the efficient market quantity:

A) it is equivalent to a tax set equal to the level of the external cost.
B) the outcome will be more efficient than a tax on pollution.
C) it is equivalent to a government regulation set equal to the efficient market quantity.
D) the price of the allowances will equal the social cost of pollution.