Under rate-of-return regulation, the price is set so that
A) price equals the marginal cost of production.
B) the firm earns a positive economic profit.
C) the firm earns a monopoly profit.
D) the firm earns a normal rate of return on investment.
D
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In equilibrium, the price of a transferable emissions permit
A) is constrained to the amount the government first charged for it. B) equals the marginal cost of abatement for all firms. C) equals the marginal cost of abatement for the firm with the highest cost, and exceeds the marginal cost of abatement of other firms. D) equals the marginal cost of abatement for the firm with the lowest cost, and is less than the marginal cost of abatement of other firms. E) equals the marginal social cost of emissions.
Contracts are usually less costly to arrange and enforce than spot market transactions, and they bring benefits that are unobtainable in spot markets
Indicate whether the statement is true or false
In 2010, dissenters were worried that the effects of policies to reduce unemployment would create
a. the conditions for higher long-term inflation. b. the conditions for a more horizontal Phillips curve. c. conditions for higher long-term unemployment. d. conditions for larger budget surpluses and, thus, higher interest rates.
A large factory pours its toxic wastewater into a nearby river, and as a result, the residents of a downstream community experience high rates of illness and birth defects. The economic problem illustrated by this example is
A. marginal thinking. B. comparative advantage. C. repealing the laws of supply and demand. D. externalities. E. productivity growth.