If society allows firms to freely pollute the environment, then which of the following is true?
a. The efficient output level can be achieved by giving firms a subsidy for the pollution they generate.
b. Market equilibrium output will be too high relative to the efficient output level.
c. Market equilibrium output will be too low relative to the efficient output level.
d. Market equilibrium output will be equivalent to the efficient output level.
b
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Suppose that initially the price of a bag of jellybeans is $6, and the price of a bottle of cola is $2. If the price of a bottle of cola increases, then the relative price of jellybeans
A) increases. B) decreases. C) stays the same, but the relative price of cola increases. D) stays the same, but the relative price of cola decreases.
If the economy is in a recession and prices are relatively stable, then the discretionary fiscal policy or policies that would most likely be recommended to correct this macroeconomic problem would be:
a. Increased government spending or decreased taxation, or a combination of the two actions b. Decreased government spending or decreased taxation, or a combination of the two actions c. Increased government spending or increased taxation, but not a combination of the two actions d. Increased government spending or increased taxation, or a combination of the two actions
The tobacco industry has a Lerner index of 0.76. Based on this information, compute the optimal markup factor.
A. 0.24 times price B. 4.17 times price C. 4.17 times marginal cost D. There is not sufficient information to determine the optimal markup factor.
To ensure that the fundamental identity of national income accounting holds, changes in inventories are
A. counted as consumption. B. treated as part of expenditure. C. ignored. D. treated as part of saving.