Q1 In theory putting a price on carbon emissions should incentivise businesses to stop polluting. So why have carbon markets failed to achieve their goal of reducing global emissions? Discussthe following statement. 'The costs of not having an effective environmental policy (carbon trading) to deal with the climate crisis would do more harm to our living standards than implementing an effective market-based environmental policy.'(8 marks) To answer this question, you will need to look at the reason for and against the use of effective market-based policies. Students will need to: 1. Decide if not using Australia's ETS would be worse for our living standards than using it. Describe the impact of the global climate crisis on living standards. (2 marks) 2. Explain how Australia's Emissions Trading Scheme (ETS) policyoperates.(2 marks) 3. Explain the short-term and long-term effects on aggregate supply and intertemporal efficiency of using the ETS policy(2 marks) 4. Illustrate how ETS operatesusing Demand Supply diagram (1 mark) 5. Use what you know to decide if not using ETS would make our living standards worse than using it.(1 mark) Remember, "discuss," wants you to present a viewpoint, offer a critical analysis considering advantages and limitations, and build a logical argument with a conclusion.