The primary advantage to selling pollution permits rather than using a fixed percent reduction for all firms is that:
A. enforcement costs are eliminated.
B. the government can raise additional revenue.
C. pollution reduction is accomplished in the least costly way possible.
D. pollution is driven to zero.
Answer: C
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An inflationary gap refers to the gap between real GDP and potential GDP when the level of output is below the level of potential GDP
a. True b. False Indicate whether the statement is true or false
Which of the following is a result of monopolists producing fewer goods and selling them at a higher price than perfectly competitive firms?
a. The elimination of barriers to entry b. Losses c. Diseconomies of scale d. Positive economic profits
Suppose that a company hires recent college graduates for two types of jobs, sales people and credit analysts. The hours worked and skill levels are the same for both positions. The sales people get to travel to several desirable locations, whereas the credit analysts do not leave the home office. When comparing the salaries of the two positions, it is likely that the company pays the
a. sales people less as a compensating differential. b. credit analysts less as a compensating differential. c. same salary for both positions because they require the same skill level. d. same salary for both positions because it would be illegal to do otherwise.
Which of the following assessments is correct based on the information presented in Exhibit 3?
a. Calvin has an absolute advantage in food production.
b. Calvin has a lower opportunity cost in cloth production.
c. Wendy has a higher opportunity cost in food production.
d. Wendy has a comparative advantage in cloth production.