Refer to A Negative Externality Problem. Suppose there are no transactions costs. Also suppose the externality is internalized when the damaged parties offer producers a bribe of $10 per unit to reduce their production. Coasian analysis indicates that social gain in this situation will equal
Demand for a good is given by Q = 100 - P. The private marginal cost of production is MCP = 10 + Q. There is a $10 per unit negative production externality in this situation.
a. $0
b. $800
c. $1,600
d. $3,200
c. $1,600
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Suppose an economy experiences a permanent increase in its expected inflation rate. As a result, there is
A) a downward shift of the short-run Phillips curve. B) a downward movement along the short-run Phillips curve. C) an upward movement along the short-run Phillips curve. D) no change at all to the short-run Phillips curve. E) an upward shift of the short-run Phillips curve.
Fiscal policy is implemented by
A) the central bank. B) private businesses. C) the Internal Revenue Service. D) the federal government.
"Dividing the economic pie more equally may reduce the size of the economic pie." This argument is characterized as:
a. a conflict between full employment and economic growth. b. a form of discrimination. c. a conflict between equity and efficiency. d. untrue.
Suppose two duopolists operate at zero marginal cost. The market demand is p = a - bQ. If firm 1 is the Stackelberg leader, what level of output will it choose?
A) q1 = (a - bq2)/2b B) q1 = (a - 2bq2)/2b C) q1 = a/b D) q1 = a/2b