When external costs are present and the government imposes a tax equal to the marginal external cost, then
A) efficiency can be achieved.
B) transaction costs will be high.
C) the marginal benefit of the external cost will fall.
D) property rights must have already been established.
A
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The major dilemma facing Boeing and Airbus is the
A) fact that neither will respond to the behavior of the other. B) certainty surrounding the reaction of each firm to the behavior of the other firm. C) fact that if each firm separately tries to maximize its profit, it might wind up with less profit that otherwise. D) competition from other firms that drives their economic profit to zero. E) fact that when they collude to maximize their profit, the other firm's profit might be larger than its profit.
How do you suppose most people form an expectation of future inflation? Is that method consistent with the assumption of adaptive expectations?
What will be an ideal response?
Assume that one laborer produces 6 units of output, two laborers produce 14 units, three produce 20 units, and four produce 24 units. If the cost is $20 per unit of labor and fixed costs are $100, what is the average total cost of producing 14 units of output?
a. $50 b. $20 c. $10 d. $100 e. $40
What is meant by strategic behavior?
What will be an ideal response?