Two companies, Dirty Inc. and Filthy Inc., each of which has access to 5 different production processes, each of which has a different cost and produces a different amount of pollution. The daily costs of the processes and the number of tons of smoke emitted are shown in the table below. Process(smoke/day) A(4 tons/day) B(3 tons/day) C(2 tons/day) D(1 ton/day) E(0 tons/day) Cost to Dirty Inc. ($/day) $110$200$380$740$1,460 Cost to Filthy Inc. ($/day) $400$430$490$580 $700Suppose pollution is initially unregulated. If the City Council requires each firm to reduce emissions by 50 percent, then the total cost to society of this policy will be ________ per day.
A. $870
B. $490
C. $380
D. $360
Answer: D
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The fact that wants cannot be fully satisfied with available resources reflects the definition of
A) the what tradeoff. B) scarcity. C) the big tradeoff. D) for whom to produce.
Refer to Table 4-7. Suppose that the quantity of labor supplied increases by 40,000 at each wage level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of labor?
A) W = $12.50; Q = 630,000 B) W = $8.50; Q = 550,000 C) W = $11.50; Q = 610,000 D) W = $9.50; Q = 610,000
The LM curve is the set of combinations of ________ such that ________
A) interest rates and real money balances, real income equals real money balances times (1/r) B) interest rates and real money balances, the money supply is equally demanded C) real income and real money balances, the production of output is equally demanded D) real income and interest rates, the production of output is equally demanded E) real income and interest rates, the money supply is equally demanded
In the new classical model, a $100 billion increase in government purchases financed by borrowing will
a. increase the real interest rate, which will crowd out private spending. b. lead to a $100 billion increase in real GDP. c. lead to a $400 billion increase in real GDP if the marginal propensity to consume is three-fourths. d. leave the interest rate, aggregate demand, and real output unchanged.