Suppose a factory pollutes a river that a downstream city relies on for drinking water. The level of pollution is not economically efficient. Which one of the following is not a possible means to increase economic efficiency in this case?
a. Government regulation requires a reduction in pollution levels
b. The factory is taxed for each unit of pollution
c. Property rights in pollution are clearly assigned to the factory
d. Property rights in pollution are clearly assigned to the city
e. The factory is required to pay increased property taxes to the city
Ans: e. The factory is required to pay increased property taxes to the city
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In the aggregate expenditures model, we note that an increase in government purchases G and an increase in lump-sum taxes T of the same amount will have
A. essentially the same effect on equilibrium real GDP, both in magnitude and in direction. B. different effects on real GDP, with the change in G having a larger impact than the change in T. C. the same magnitudes of impact on equilibrium real GDP, though in opposite directions. D. different effects on real GDP, with the change in T having a larger impact than the change in G.
Human resources that perform the functions of organizing, managing, and assembling the other resources are called
A) physical capital. B) venture capital. C) entrepreneurship. D) productive capital.
When the government taxes a good or service, it
A) increases consumer surplus for the good or service. B) increases producer surplus for the good or service. C) eliminates the deadweight loss associated with the good or service. D) affects the market equilibrium for that good or service.
The price elasticity of demand is the __________________ change in the quantity demanded of a good or service divided by the percentage change in the price.
a. quantity b. percentage c. relative d. absolute