Efficiency is reached by allocating resources to those who have the greatest willingness to pay for them. This can be achieved in a market where a negative externality is present by:
A. taxing consumers.
B. place a quota at the efficient level.
C. giving consumers a subsidy.
D. All of these will achieve efficiency.
Answer: A
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Referring to a production possibilities curve and the goods being compared, depict the economic event. The literacy rate increases among workers (capital goods vs. consumer goods).
A. A movement from a point inside the curve to a point on the curve B. A movement from a point on the curve to a point inside the curve C. A shift in the entire curve to the right (outward) D. A shift in the entire curve to the left (inward)
All else held constant, which of the following is a necessary consequence of a depreciation of the U.S. dollar against other currencies?
A. U.S. exports will become cheaper relative to other nations' products. B. The terms of trade will move in favor of the United States. C. The United States will experience an increase in the volume of imports. D. International speculators will buy U.S. dollars and sell other currencies.
A subsidy to wheat farmers reduces the price of a bushel of wheat from $2.50 to $2 per bushel. The equilibrium quantity of wheat sold prior to the subsidy was equal to 200,000 bushels. Predict the new equilibrium quantity of wheat after the imposition of the subsidy given that the demand for wheat is known to be unit elastic
a. 100,000 bushels b. 200,000 bushels c. 250,000 bushels d. 400,000 bushels
Suppose the economy is in long-run equilibrium. Senator A succeeds in getting taxes lowered. At the same time, Senator B succeeds in getting major restrictions on logging enacted. In the short run
a) real GDP will fall and the price level might rise, fall, or stay the same. b) the price level will fall, and real GDP might rise, fall, or stay the same. c) real GDP will rise and the price level might rise, fall, or stay the same. d) the price level will rise, and real GDP might rise, fall, or stay the same.