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Answer multiplechoice please Q13: To meet the Paris Agreement goals (on climate change), the Trudeau government recently increased the fuel tax. This distortion to the

Answer multiplechoice please

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Q13: To meet the Paris Agreement goals (on climate change), the Trudeau government recently increased the fuel tax. This distortion to the competitive equilibrium leads to a reduction in social surplus but, given that Canada's contribution to global emission is only 1.5%, leads to an insignificant reduction in global CO2 emission. Assuming that (i) people in Canada are rational and (ii) the government's only objective is the well-being of Canadians, why Canada cannot simply get out of the Paris Agreement? Choose the answer based on game-theoretical arguments assuming (i) and (ii) above are correct even if you do not believe in these assumptions. A) There are significant penalties for exiting the Paris Agreement or not meeting the set goals B) If Canada exits the Paris Agreement, the probability that other countries will exit too will increase. C) Canada will not be considered a trustworthy country and the cost of debt both for the Canadian government and Canadian firms will increase. D) Canadians will be outraged that their own government does not care about their future. E) Canadian energy industry will lose the international subsidies they receive based on the Paris Agreement

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