The above figure shows the payoff matrix for two firms. A chemical firm must choose between a low level of production which yields one ton of pollution into a nearby lake and a high level of production which yields two tons of pollution into the
nearby lake. A private beach on the lake must decide whether to operate or not. Increased pollution reduces the number of people who wish to visit the beach. If the chemical firm owns the lake, and the beach owner must pay $10 to keep the chemical firm at just one ton of pollution, then A) the beach shuts down and the chemical firm produces one ton of pollution.
B) the beach shuts down and the chemical firm produces two tons of pollution.
C) the beach operates and the chemical firm produces one ton of pollution.
D) the beach operates and the chemical firm produces two tons of pollution.
C
You might also like to view...
If the opportunity cost of producing more of one good remains the same as more of that good is produced, then the production method is inefficient
Indicate whether the statement is true or false
Aggregate output is ________ related to autonomous consumer expenditure, and is ________ related to the level of taxes
A) negatively; negatively B) negatively; positively C) positively; negatively D) positively; positively
If a subsidy (going to producers) on a good is eliminated, this would
A. move its supply curve to the right. B. cause a movement along the supply curve to a (lower price, lower quantity) point. C. move its supply curve to the left. D. cause a movement along the supply curve to a (higher price, higher quantity) point.
The price elasticity of demand is the
a. percentage change in price divided by the percentage change in quantity demanded b. average change in price divided by the average change in quantity demanded c. percentage change in quantity demanded divided by the percentage change in price d. average change in price divided by the average change in quantity demanded e. percentage change in quantity demanded divided by the average change in price