As compared to a pollution tax, a command-and-control policy will:
A. increase production costs by a smaller amount.
B. increase price by a smaller amount.
C. shift the supply curve to the left by a smaller amount.
D. shift the supply curve to the left by a larger amount.
Answer: D
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Which of the following is not a weakness of fiscal policy? a. Implementation of policy is difficult
b. Time lags in fiscal policy are long and variable. c. Fiscal policy works only during periods of stagflation. d. Fiscal policy often affects only current income, but many economic decisions are made on the basis of permanent income. e. Fiscal policy might have undesirable long-term effects on short-run aggregate supply.
The market mechanism:
a) Works through central planning by the government. b) Is very inefficient since consumers cannot communicate directly with producers. c) Uses prices as a means of communication between consumers and producers. d) Eliminates market failures created by the government.
Marginal cost pricing means that a firm
A. Produces up to the output level at which MC = 0 for a given market price. B. Lowers market price to marginal cost for a given output. C. Produces up to the output where P = MC for a given market price. D. Lets marginal cost rise to the market price for a given output.
The money market rate observed most closely by the Open Market Account Manager is the
A) Treasury bill rate. B) commercial paper rate. C) discount rate. D) federal funds rate.