Your neighbor likes to blast 1970's rock music and the louder the better. The loud music imposes a cost on you because it disrupts your study of economics. Let D stand for the volume of his music in decibels, B for his benefits and C for your costs, where B and C are measured in dollars. For any given volume, D, your neighbor's benefit is B = 0.63D - 0.002D2 and your cost is C = 0.06D + 0.001D2. What is the efficient Pigouvian tax?
A. $0.75 per decibel
B. $0.29 per decibel
C. $0.24 per decibel
D. $0.25 per decibel
D. $0.25 per decibel
You might also like to view...
The downward-sloping demand curve of a monopolistic competitor
A. ensures that the firm will produce at minimum average cost in the long run. B. reflects some level of control over its own price. C. indicates collusion among the members of the product group. D. becomes eventually horizontal in the long run.
Money is a convenience that makes the economic pie bigger
Indicate whether the statement is true or false
What do RBC economists mean by the term calibration?
A) Modifying the structure of an economic theory to strengthen its logic B) Changing a theory as the economy changes C) Working out a detailed numerical example of a more general theory D) Writing out the implications of a theory for all the main economic variables
If the United States looks more economically and politically stable relative to the rest of the world, this will
A) decrease the demand for dollars. B) increase the demand for dollars. C) have no effect on the demand for dollars. D) stop all trading between the currencies of the United States and other countries.