Much of the nation's coal is extracted by strip mining. This process leaves a huge barren hole in the ground when complete, and the cost of replanting the trees is approximately $10 per ton of coal. Burning the coal for electricity causes air pollution. No one knows how much damage the air pollution causes, but we know that for another $10 per ton the power plant can be outfitted with a pollution
control device. What is one measure of the true social cost of coal fired electricity, in dollars per ton?
a. Private marginal cost plus the $10 replanting charge.
b. Private marginal cost plus the $10 emission control charge.
c. Only the $20 of replanting and emission control charges, because the other costs are private, not social.
d. Private marginal cost plus the $20 of replanting and emission control charges.
e. In order to answer this question we need to know the dollar value of the pollution.
d
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Refer to Figure 13-8. What is the firm's profit-maximizing price?
A) $12 B) $13 C) $14 D) $16
Profits will be maximized when the slope of the total revenue curve and the slope of the total cost curve equal zero
a. True b. False Indicate whether the statement is true or false
A Giffen good is a good for which
a. an increase in the price raises the quantity demanded. b. the income effect outweighs the substitution effect. c. an increase in the price decreases the quantity demanded. d. Both a) and b) are correct.
Which of these pairs of concepts can be positively, as well as negatively, related?
A. The income of consumers and the demand for a product B. The price of a product and the quantity of that product demanded C. The price of a product and the demand for a complementary product D. The cost of resources required to make a product and its supply