At the market output and price for a good whose production causes pollution:
a. pollution is eliminated.
b. the marginal social cost of production exceeds the marginal social benefit of production
c. the private cost of production equals the private benefit of production.
d. the marginal social benefit of production equals the marginal social cost of production.
b
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If there is something extra bad about local consumption of a product, then a tariff can be good for the country because
A. the tariff revenue is invested in the production of substitute products. B. the tariff leads to higher domestic price for the product. C. the tariff makes all residents richer. D. the tariff brings down the domestic price of the product.
________ occurs when a foreign firm sells its exports at a lower price than its cost of production
A) Dumping B) The trickle-down effect C) Rent seeking D) Tariff avoidance E) Nontariff barrier protection
Suppose current government spending decreases and that individuals expect future government spending to decrease. Given this information, in which of the following cases will output in the current period be more likely to decrease?
A) Individuals consider only the short run effects of changes in future macro variables when forming expectations of future output and future interest rates. B) Individuals consider only the medium run effects of changes in future macro variables when forming expectations of future output and future interest rates. C) Individuals consider only the long run effects of changes in future macro variables when forming expectations of future output and future interest rates. D) The output effects will be the same in B and C.
The costs that a firm incurs when it changes its production level are adjustment costs.
Answer the following statement true (T) or false (F)