A firm operates and produces pollution that only harms an individual, Bob. The firm and Bob both know the costs and benefits of reducing pollution
Neither the firm nor Bob acts strategically while bargaining, and there are no transaction costs associated with bargaining. Explain how the efficient level of pollution occurs no matter whether the firm or Bob owns the property right to pollution.
If the firm has the right to pollute, then Bob can bargain with the firm. Bob will pay the firm up to the point where his per unit payment to reduce the pollution equals the marginal benefit he receives from pollution. This will be the efficient level of pollution. If Bob has the right to have no pollution, then the firm will pay to pollute until this cost equals the marginal benefit of a unit of production. This will result in the efficient level of pollution. Thus, no matter which party owns the property right, the efficient level of pollution will result.
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Suppose that last year the Consumer Price Index was 124; this year it is 130.7. What was the inflation rate between these years?
A) 30.7 percent B) 6.7 percent C) 5.4 percent D) 5.1 percent
Voluntarism includes methods for dealing with pollution that
a. carry no legal authority. b. call the problems of pollution to the public's attention. c. involve trying to persuade polluters to reduce or eliminate pollution voluntarily. d. include all of the above.
When the growth rates of actual and potential GDP diverge, they usually diverge because
a. actual GDP growth equals potential GDP growth. b. actual GDP growth falls below potential GDP growth. c. potential GDP growth rates fall below actual GDP growth rates. d. potential GDP growth rates fluctuate while actual GDP growth rates remain stable.
A tax levied on the total amount spent in retail stores is called
a. a sales tax. b. an excise tax. c. a retail tax. d. an income tax.