Consider a carbon-tax and a cap-and-trade strategy for reducing carbon dioxide and other so-called greenhouse gases. Which of the following statements is true?

a.) A carbon tax and a cap-and-trade system have the same outcomes.
b.) Under a cap-and-trade system the firms that polllute the most must clean up the most.
c.) A cap-and-trade system improves efficiency by creating scarcity.
d.) A carbon tax would reduce consumption and lessen the externalities but is easy to evade.

ANSWER:

a.) A carbon tax and a cap-and-trade system have the same outcomes.