3. Suppose that air pollution is a problem. a. Describe a "cap and trade" policy as a possible solution   b What, if any, externalities are addressed by this program. Include in your explanation whether these are positive or negative, and how the policy ameliorates them. c.What might be some drawbacks to this policy?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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3. Suppose that air pollution is a problem.

a. Describe a "cap and trade" policy as a possible solution  

b What, if any, externalities are addressed by this program. Include in your explanation whether these are positive or negative, and how the policy ameliorates them.

c.What might be some drawbacks to this policy?

Your answers to the above should be complete enough to answer the question. You can use verbal, graphical, mathematical explanations in your answer. Your answer to #3 a, should be at least 250 -500 words.

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Transcribed Image Text:Price Graph 3 Q₁ +Q₂ S D₂ Quantity Price Graph 4 Q₂- .Q₁ M D₁ Quantity
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