Figure 16.3Figure 16.3 depicts a market for electricity. S1 is the supply curve without the external costs. S2 is the supply curve with the $T tax. Assume electricity production incurs external costs. If the government imposes a pollution tax of $TÂ per mega watt:
A. the equilibrium price of electricity increases but the equilibrium output decreases.
B. the equilibrium price of electricity decreases but the equilibrium output increases.
C. both the equilibrium price and output increase.
D. both the equilibrium price and output decrease.
Answer: A
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Long-run economic profits are most likely to be earned in
A) perfect competition and oligopoly. B) perfect competition and monopoly. C) monopoly and oligopoly. D) oligopoly and monopolistic competition. E) perfect competition and monopolistic competition.
Suppose a manufacturer of software develops a new computer program that sells for $50. The $50 cost includes $0.25 for the CD it is stored on, $5 for the labor of the company software programmers, and $1.75 for packaging materials and transportation costs. Value added by the software company is
A) $49.75. B) $48.25. C) $48. D) $44.75.
Microeconomics:
What will be an ideal response?
In the situation involving a bilateral monopoly, a
A) single firm acts as both the monopsonist and the monopoly. B) single seller sells to a single buyer. C) monopsonist sells to a monopsonist. D) monopolist sells to a monopolist.