The railroad companies of Pacific Union and Central Pacific were both built with massive government subsidies often on a per-mile basic in the late 19th century, which created railroad monopolies. Both failed soon after completion of their lines
The Great Northern railroad took much longer to build since it was completed without government subsidies. It turned out to be much more successful than either Pacific Union or Central Pacific. What could account for this apparent disparity?
Subsidies often bread inefficiency. In this particular case subsidizing a railroad based on a per-mile basis probably led Pacific Union and Central Union to build more circuitous routes. The Great Northern railroad had every incentive to keep costs down as much as possible and probably laid fewer miles of track since it was not receiving subsidies. Shorter routes probably made their shipments arrive at their destinations much faster and improved efficiency.
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Indicate whether the statement is true or false
If the demand curve for an inferior good is drawn,
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A) occurs under any undesirable event. B) occurs when an action doesn't take into account the costs it imposes on others. C) can be a natural phenomenon, such as being struck dead by a bolt of lightening. D) cannot occur at the same time as a positive externality.
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A) $150 billion. B) close to zero. C) -$20 billion. D) -$150 billion.