The exchange of goods and services directly without money is called:
a. creative destruction.
b. barter.
c. arbitration.
d. currency trade.
e. illegal trade.
QUESTION 2Suppose the current price of a marketable permit to emit one ton of sulfur dioxide is 100 . If the marginal cost for a firm to reduce one ton of sulfur dioxide is 80, then:
a. the firm will buy the permit and emit one more ton of sulfur dioxide.
b. the firm will reduce its emissions of sulfur dioxide by one ton.
c. the firm will buy the permit and increase its emissions by 20 tons.
d. the firm will shut down.
e. the firm will be willing to pay up to 200 for a permit.
QUESTION 3Barter requires a double coincidence of wants. This means that:
a. at least two traders must demand a commodity.
b. any two traders involved in a transaction must have money.
c. each trader must demand at least two commodities.
d. either of the two traders involved in a transaction must have money.
e. when two traders are involved in a transaction each trader must want what the other has to offer.
QUESTION 4The European Union Emission Trading Scheme is an example of:
a. a pollution tax.
b. a pollution subsidy.
c. a command approach.
d. cap and trade.
e. enforcing private property rights.
QUESTION 5The term barter refers to exchanges made:
a. only with the use of money.
b. without the use of money.
c. outside the U.S. economy.
d. only in underdeveloped countries.
e. within countries in a monetary union.
QUESTION 6When the government tries to control pollution through cap and trade, it _____.
a. issues permits that enables the owners of the permit to pollute
b. allows polluting firms to produce public goods that reduce pollution
c. levies tax on the polluting firm
d. gives subsidies to the firms who adopt clean production technologies
e. takes legal actions against the firms who pollute beyond the specified level