hard · GRE Verbal

An economist reviewing a proposed carbon-tax model notes it correctly prices emissions at the point of production but does not adjust for firms relocating output to untaxed jurisdictions, a response the model's own assumptions imply should occur. She calls the pricing mechanism sound and the omission a fixable gap rather than a fatal flaw. Which choice best captures the economist's stance toward the model?

  1. Unreserved approval: the model requires no further revision before adoption and no aspect of the model needs any further scrutiny at all
  2. Complete rejection: the pricing mechanism itself is fundamentally miscalculated
  3. Cautious endorsement: the core mechanism works, but a specific omission needs correction
  4. Detached neutrality: the economist offers no judgment on the model's merit
  5. Preference for abandoning carbon pricing in favor of an unrelated policy

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