Suppose the government imposes a per unit tax on an item whose production process creates a negative externality. Suppose the tax is exactly the value of the marginal externality cost. If the government now uses the tax revenue to clean up pollution from this process, the market will:
A. have internalized all costs and benefits.
B. have used a command-and-control policy rather than a market-based policy.
C. underproduce the good that is resulting in the negative externality.
D. reduce the costs to the buyers and sellers of the good.
Answer: A
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Along the short-run Phillips curve SRPC0 the natural unemployment rate is
A) 7 percent. B) 3 percent. C) 6 percent. D) an amount that can be determined from the figure, but none of the above answers is correct. E) an amount that cannot be determined from the figure. The figure above shows some Phillips curves for an economy.
Which of the following is not a source of comparative advantage?
A) technology B) climate and natural resources C) a strong foreign currency exchange rate D) relative abundance of labor and capital
A firm practicing group price discrimination across two countries sets MR = common MC and therefore
A) price will be the same in both countries. B) price will be twice MR. C) profit will be the same in both countries. D) price will likely be different in each country.
The entry of new firms into a monopolistically competitive market is accompanied by
a. both positive and negative externalities. b. only positive externalities. c. only negative externalities. d. only private profit opportunities (no externalities).