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Managerial Economics: California's Cap-Trade Law Faces Fall Ballot Challenge

1. Other than the market for energy itself, what is a market that might be affected by a cap and trade policy? Explain.

2. In the market you chose, which curve (supply or demand) would shift in response to the policy? Which shifter is affected? Will it increase or decrease?

3. Draw a supply and demand graph. Shift the curve in the direction that you chose in the previous section. Find the new equilibrium. Did equilibrium price increase or decrease? Did equilibrium quantity increase or decrease?

4. Explain whether your findings in #3 are what you expected.

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Answer:
1. Other than the market for energy itself, what is a market that might be affected by a cap and trade policy? Explain.

Other then market for energy itself, a market that might be affected by a cap and trade policy is the job market. With cap and trade in effect the companies will have to pay an amount to purchase a permit for extra emission. This will lead to an amount of job loss as the company will have low production and at the same time less ...

Solution Summary

The expert examines what the trade law faces fall ballot challenges for California's Cap.

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