Your neighbor in an apartment complex plays his music very loudly late at night, which makes it difficult for you to get to sleep. You offer the neighbor $50, the monetary value you put on your sleep, to never play his music between midnight and 7 AM. By
doing so
A) you have failed to bring about an efficient solution since you should have complained to the police.
B) you have indicated the cost of the externality. The externality is not internalized even if he accepts your offer.
C) you have indicated the cost of the externality, which internalizes the externality.
D) you have indicated a willingness to make the external cost a social cost.
Answer: C
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Suppose a Canadian investor buys a one-year U.S. government bond that pays 7 percent interest. If the U.S. dollar appreciates 4 percent against the Canadian dollar during the year, what must be the yield on a comparable Canadian government bond for interest rate parity to hold?
a. 3 percent b. 4 percent c. 7 percent d. 10 percent e. 11 percent
Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is
a. $33,800. b. $42,600. c. $49,800. d. $57,000.
Most economists support open trade because it increase our choices as consumers, lowers costs for producers, increases competition and innovation, and leads to greater diffusion of technological change
Indicate whether the statement is true or false
The United States' first income tax was imposed during
(a) the American Revolutionary War (1763–1789). (b) the Civil War (1861–1865). (c) the 1930's Great Depression. (d) World War II (1939–1945).