Like negative externalities, tradable permits are useful in allocating common resources because:
A. the socially optimal quantity is not the same as the individual consumers in either case.
B. the depletion of common resources imposes a negative externality.
C. the problem present in both is overconsumption.
D. All of these statements are true.
Answer: D
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Suppose that a monopoly is currently producing the quantity at which marginal revenue is less than marginal cost. The monopoly can increase its profit by ________
A) shutting down B) lowering its price and increasing its output C) raising its price and decreasing its output D) lowering its price and decreasing its output
An expansionary fiscal policy
I. includes an increase in government spending. II. includes tax cuts. III. increases a government budget deficit or reduces a government budget surplus. A) I, II, and III B) I and II only C) I and III only D) II and III only
Refer to the data. The marginal product of the fourth worker:
Answer the question on the basis of the following information:
A. is 5.
B. is 7.
C. is 7 1 / 2 .
D. cannot be calculated from the information given.
Assume that you are the new CEO of a major corporation that has five major product lines each run as separate corporations
You discover that if you invested the company's money outside of the firm that it could earn a 15% rate of return on the investment. You tell all the presidents of each of these subsidiary companies that in order for them to remain with the company that their return on capital must equal to or exceed 15% rate of return. Use two economic principles discussed in chapter 1 to explain why the CEO's advice is sound.