Suppose unregulated production of pesticides results in an equilibrium price and quantity of $400 and 1,000 tons per day, respectively, and a marginal external cost of $10 a ton
a) If the government were to eliminate the external cost by using taxes, what should the tax equal?
b) Would the government action described above affect the quantity of pesticides produced? If yes, how? If no, why not?
a) $10 a ton
b) Yes, with the tax the output of pesticides would be decreased to the efficient level.
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There are five hundred buyers in the market for cheese. If we know each individual's demand curves, to find the market demand, we must
A) multiply the price times quantity for each buyer and then add the resulting products together. B) add the quantities that each buyer will purchase at every price. C) add the prices that each buyer will pay at every quantity. D) average the price each buyer is willing to pay for each given quantity. E) give up because there is no way to find the market demand.
If autonomous spending decreases, then
A) the expenditure multiplier means that equilibrium expenditure increases by a larger amount. B) the expenditure multiplier means that equilibrium expenditure increases by a smaller amount. C) equilibrium expenditure does not change. D) the expenditure multiplier means that equilibrium expenditure decreases by a larger amount. E) equilibrium expenditure decreases by the same amount.
Refer to Scenario 1-2. Using marginal analysis terminology, what is another economic term for the incremental cost of producing the last 500 cigars?
A) explicit cost B) marginal cost C) operating cost D) Any of the above terms are correct.
If buyers of a monopolistically competitive product feel the products of different sellers have little differences between them, then the demand for each seller's product is relatively elastic
Indicate whether the statement is true or false