A
A price ceiling set on agricultural commodities to protect consumer interests
B
An environmental policy tool setting a ceiling on total emissions while allowing market participants to trade emission permits
C
A government subsidy scheme providing tax caps for industries adopting renewable energy sources
D
A mandatory quota system capping foreign direct investment in polluting industries
Correct answer: (b) An environmental policy tool setting a ceiling on total emissions while allowing market participants to trade emission permits
Explanation
Option B correctly defines Cap-and-Trade as an environmental policy tool that sets a ceiling (cap) on total emissions and permits market participants to buy and sell emission allowances (trade). The other options are incorrect.
Same topic · past papers
UPSC has asked this before
These previous-year questions sit on the same topic. Open one to practise the earlier ask.