Explain how a specific tax equal to the marginal harm of pollution can increase or decrease total welfare in a monopoly market
What will be an ideal response?
If the monopoly is producing more output and pollution than the social optimum, then a specific tax equal to the marginal harm of pollution will increase total welfare. However, a monopoly may produce less output and thus pollution than is socially optimal. If this is the case, then a tax will decrease output more and lower welfare.
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The contract curve in an Edgeworth Box diagram illustrates
A) the only efficient allocation of goods among individuals. B) all possible efficient allocations of goods among individuals. C) all equitable distributions of goods among individuals. D) the only equitable distribution of goods among individuals.
Suppose the price of crude oil used to produce gasoline rises significantly. At the same time, consumers purchase hybrid cars in great numbers. In the market for gasoline, the market clearing price ________ and the equilibrium quantity ________
A) definitely falls, is indeterminate B) is indeterminate, definitely falls C) definitely falls, definitely rises D) definitely rises, is indeterminate
Fiscal federalism
A. is uncommon in the United States. B. involves grants between levels of government. C. relies on balanced budgets. D. is administered by the Federal Reserve.
Walmart, like many companies in the new economy, uses a hub-and-spoke distribution system to
A. decrease consumer demand. B. increase costs of stocking and inventory. C. change consumer attitudes toward warehouse shopping. D. decrease costs of stocking and inventory.