Monetarists believe that velocity
A) is constant.
B) changes erratically.
C) and the money supply always have an inverse relationship.
D) changes in a way that can be understood and predicted.
D
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Railway engines create sparks, which sometimes set fire to crops planted near the tracks. A large number of farmers are affected, and transactions costs prevent the farmers and the railroad from negotiating bribes or side payments. The price of railway service is $250 per train, and each train causes $50 of crop damage. The accompanying diagram shows the relevant market for railway service.
(i) Suppose a Pigovian tax of $50 per train is imposed on the railroad. By how much will social gain increase?
(ii) Suppose that the farmers can move their crops away from the tracks at a cost of $2,400 per month. If the goal is to achieve economic efficiency, who should be made liable for the crop damage? What will be the resulting social gain?
(iii) Suppose that farmers still have the option of moving their crops as described in part ii. Also suppose that the railroad can install safety equipment that will prevent the engine sparks at a cost of $25 per train. If the goal is to achieve economic efficiency, who should be made liable for the crop damage? What will be the resulting social gain?
The marginal propensity to consume is calculated by
A) dividing the change in income by the change in consumption. B) dividing income by consumption. C) dividing consumption by income. D) dividing the change in consumption by the change in income.
The schedules in the table give the marginal social benefit and marginal social cost of a DVD. If there are no external benefits or external costs, the efficient number of DVDs to produce is ________ a week
A) 1 B) 3 C) 5 D) any number less than 3
A company does not need to know the price of each resource it employs if it wants to determine whether or not it is achieving
A) technological efficiency. B) economic efficiency. C) accounting efficiency. D) managerial efficiency.