A Pigovian tax imposed on consumers ________ the price, and if the same tax were imposed on producers, it would ________ the price.
A. decreases; increase
B. increases; decrease
C. decreases; decrease
D. increases; increase
Answer: D
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What is the rationale behind a cap-and-trade emission allowance system?
A) It creates a market for externalities. B) It disciplines polluting firms by specifying the maximum amount of emissions allowed and gives them permits to pollute up to their allowance. C) It provides firms with the incentive to consider less costly alternatives to pollution reduction by making firms pay for the right to pollute beyond their specified allowance. D) It raises revenue for the government through the sale of permits.
Changing the labels on isoquants without changing the shapes of the isoquants implies no change in the underlying technology so long as the ordering of isoquants is preserved.
Answer the following statement true (T) or false (F)
What happens if the Brazilian real appreciates relative to the U.S. dollar?
A) Brazilians will buy fewer U.S. goods, which generates an increase in the quantity supplied of dollars. B) The quantity demanded of reals increases as U.S. residents want to buy more Brazilian products. C) The quantity of reals supplied increases because the lower price (in reals) for U.S. goods induces Brazilians to buy more U.S. products. D) The U.S. Federal Reserve Bank increases the supply of dollars to the world economy.
Suppose the price of an ounce of silver is 100 nuevos soles in Peru and $400 in the United States. This implies:
a. the Peruvian nuevo sol is worth four times the value of a U.S. dollar. b. the Peruvian nuevo sol is worth one-fourth the value of a U.S. dollar. c. Peru's economy must be four times larger than the U.S. economy. d. the U.S. economy must be four times larger than that of Peru. e. the U.S. dollar is worth four times the value of a Peruvian nuevo sol.