Suppose that the EPA has proposed strict controls on the amount of sulfur that diesel fuel contains. These controls were designed to fully offset the cost of pollution generated by diesel fuel vehicles. The effect of the regulation is estimated to increase the equilibrium price of a gallon of diesel fuel by 10 cents. Assuming that the supply of diesel fuel has a positive slope and demand has a negative slope, the quantity of diesel fuel sold after imposition of the regulation will:
A. decrease only if diesel fuel is a normal good.
B. decrease.
C. remain the same.
D. increase.
Answer: B
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How does the presence of negative externalities affect the calculation of GDP?
What will be an ideal response?
Refer to the table above. If the rental price of machines is $40 per day, up to how many machines should the firm rent to maximize profits?
A) 2 B) 4 C) 6 D) 7
The Federal Reserve
a. designs tax policy. b. enforces the nation's antitrust laws. c. sets the nation's monetary policy. d. analyzes data on workers.
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, as the economy moves from Point D to Point B, the opportunity cost of hybrid cars, measured in terms of motorcycles,
A. initially increases, then decreases. B. increases. C. remains constant. D. decreases.