The inclusion of external costs in the decision making process determining equilibrium price and quantity leads to
A. higher priced items and increased quantity.
B. higher priced items and a decline in quantity.
C. lower priced items and increased quantity.
D. lower priced items and a decline in quantity.
Answer: B
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Which of the following statements is true under the Gauss-Markov assumptions?
A. Among a certain class of estimators, OLS estimators are best linear unbiased, but are asymptotically inefficient. B. Among a certain class of estimators, OLS estimators are biased but asymptotically efficient. C. Among a certain class of estimators, OLS estimators are best linear unbiased and asymptotically efficient. D. The LM test is independent of the Gauss-Markov assumptions.
Investment in physical and human capital is typically encouraged by
A. lower taxes on returns to education. B. lower taxes on interest income. C. lower taxes on investment returns. D. all of the options are correct.
Economies of scale will lead to only one firm in the industry because
A. one firm has an average cost curve, which has shifted below the average cost curves of its competitors. B. by increasing output a firm is able to lower the cost per unit and charge lower prices driving smaller firms out of business. C. there are governmental entry restrictions. D. of government licensing.
An optimal choice in which a consumer does not consume all types of goods
A) is a corner solution. B) cannot be an equilibrium. C) cannot exhaust the budget constraint. D) is an interior solution.