Exhibit 30-3 Costs of Eliminating:Firm A Firm B Firm C 1st ton of pollution$ 30 $ 50 $ 600 2nd ton of pollution$ 70 $ 90 $ 700 3rd ton of pollution$125 $150 $ 900 4th ton of pollution$200 $250 $1,300 Refer to Exhibit 30-3. Suppose that Firms A, B, and C are the only polluters in the state and that each emits 4 tons of pollution into the atmosphere. To cut the level of pollution in half the government issues two transferable pollution permits to each firm (a cap and trade policy). What is the total cost savings to society of decreasing pollution to half its present level if firm C buys one pollution permit from firm A and one pollution permit from firm B compared to if there were a government mandate for each firm to cut pollution by one-half?
A. $515
B. $1,300
C. $1,380
D. $965
E. $1,025
Answer: E
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Suppose that the current price level is 110, real GDP is $100 billion, and long-run aggregate supply is $95 billion. We can conclude that
A) the price level will fall and input prices will rise until real GDP pulls long-run aggregate supply up to $100 billion. B) aggregate demand will increase until both short-run and long-run aggregate supply equal $100 billion. C) the price level will fall until long-run aggregate supply shifts to $100 billion. D) input prices will rise until real GDP is $95 billion.
Suppose Bev's Bags makes large handbags and small handbags. They sold 70,000 large bags for $45 each and 25,000 small bags for $15 each. If the company had total costs of $2,000,000, what was the profit for this company?
A. $1,525,000 B. $3,525,000 C. $375,000 D. $850,000
Computers and software programs are:
a. inferior goods. b. complementary goods. c. goods with a cross-price elasticity of demand of 0. d. substitute goods. e. perfectly elastic goods.
The two primary reasons to adopt measures to restrict trade are that
a. they help keep real wages high in the importing country, and they also permit small businesses to compete in international markets. b. they may help the importing country improve its educational system, and they keep high-technology products from being stolen by foreign competitors. c. they may help the importing country get better prices for its goods, and they protect certain industries from foreign competition. d. they may help advance the political goals of the nation, and they encourage productivity in domestic industries.