Externalities between two firms can be "internalized" if: I. The two firms merge. II. Bargaining costs are zero. III. The externalities affect each firm equally. IV. Marginal costs for both firms are constant. Which statement(s) correctly complete(s) the sentence?
a. Only II.
b. All except III.
c. I and II, but not III and IV.
d. I and IV, but not II and III
c
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The figure above shows the marginal social cost curve of generating electricity and the marginal private cost curve. The marginal external cost when 200 billion kilowatt hours are produced is
A) 0¢ per kilowatt. B) 10¢ per kilowatt. C) 20¢ per kilowatt. D) 15¢ per kilowatt. E) 5¢ per kilowatt.
What is one reason activists might lobby the government for regulation limiting the production of a product to less than would normally be in a perfectly competitive market?
A) They value consumer surplus more than producer surplus. B) They value producer surplus more than consumer surplus. C) They seek to avoid future regulation. D) They seek to minimize total surplus.
The marginal physical product of labor is
A) the output of the firm divided by the number of workers. B) the change in total revenues resulting from the addition of one more worker, while increasing one other factor of production. C) the change in output resulting from the addition of one more worker, holding other factors of production constant. D) the change in output resulting from the addition of one more worker, adjusting the level of the capital stock accordingly.
When an economy is operating on its production possibilities curve, more production of one good means less production of another because:
a. resources are limited. b. resources are not perfectly adaptable to alternative uses. c. wants are limited. d. wants are unlimited. e. some resources are not employed.