Refer to the data provided in Table 16.1 below to answer the following question(s).Table 16.1 shows the situation facing two firms, both of which are polluting. Assume that each firm emits 5 units of pollution.Table 16.1Firm AFirm AFirm AFirm BFirm BFirm BReduction of Pollution by Firm AMC of reducing pollution for Firm ATC of reducing pollution for Firm AReduction of Pollution by Firm BMC of reducing pollution for Firm BTC of reducing pollution for Firm B1$4$41$8$82 610212203 9193163641332420565185052480Refer to Table 16.1. Suppose the government wants to reduce the total amount of pollution from the current level of 10 to 4. To do this, the government caps each firm's emissions at 2 units and issues 2 permits to each firm. If firms are allowed to trade permits, how many permits
will be traded between the two firms?
A. B will buy two permits from A.
B. A will buy one permit from B.
C. B will buy one permit from A.
D. A will buy two permits from B.
Answer: C
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Explanations for the high saving rate in China consistent with the life-cycle reason for saving include:
A. few opportunities to borrow funds for education or paying for a house. B. the desire to leave resources to children who provide support and attention to parents in their old age. C. China's limited social safety net provides most people with little protection against health problems and medical costs. D. low unemployment rates in China.
When the production of a good generates external costs, a firm's private supply curve will be
A. vertical. B. horizontal. C. to the left of the social supply curve. D. to the right of the social supply curve.
As interest rates fall,
A) the values of bonds rise. B) the values of bonds fall. C) the values of bonds are unchanged. D) the value of perpetuities are unchanged, but the value of other bonds change in value. E) the value of all bonds except perpetuities change.
For a perfectly competitive firm,
a. marginal revenue is the same as the market price b. marginal revenue equals total revenue c. to earn an economic profit, it must be larger than its competitors d. price always exceeds average total cost e. marginal cost is always equal to average cost