If the government taxes a good that generates a negative externality, then the government:
A. will generate tax revenue, but lower economic surplus.
B. can increase total economic surplus, but tax revenue will fall.
C. will neither increase total economic surplus nor generate tax revenue.
D. can increase total economic surplus and generate tax revenue.
Answer: D
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If firms in a competitive price-searcher market are earning economic profits, which of the following scenarios would best describe the change existing firms would face as the market adjusts to long-run equilibrium?
a. An increase in demand for each firm and lower prices. b. A decrease in demand for each firm and lower prices. c. An increase in demand for each firm and higher prices. d. A decrease in demand for each firm and higher prices.
The Principle of Increasing Opportunity Costs states that:
A. opportunity costs increase when too little is produced. B. when increasing production, resources with the lowest opportunity costs should be used first. C. when increasing production, resources with the lowest opportunity costs should be used last. D. productive people do the hardest tasks first.
You own shares in a start-up internet company. If large swings in the stock market increase financial investors' concerns about market risk, then the price of your shares will ________, holding other factors constant.
A. either increase or decrease B. increase C. not change D. decrease
If the spending multiplier is 1.2, then a $100 billion increase in government spending will increase private sector spending by
A. $100 billion. B. $20 billion. C. $120 billion. D. $83.3 billion.