The AS/AD model studies the relationship between
A) the price level and unemployment.
B) the price level and real GDP.
C) unemployment and real GDP.
D) nominal GDP and inflation.
B
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Suppose that a government agency is trying to decide between two pollution reduction policy options. Under the permit option, 100 pollution permits would be sold, each allowing emission of one unit of pollution. Firms would be forced to shut down if they produced any units of pollution for which they did not hold a permit. Under the pollution tax option, firms would be taxed $250 for each unit of pollution emitted. The regulated firms all currently pollute and face varying costs of pollution reduction, though all face increasing marginal costs of pollution reduction. Suppose the permit policy is adopted. A firm will wish to purchase its first permit if the price of that permit is less than or equal to:
A. the average cost of eliminating one unit of pollution. B. the reduction in costs associated with increasing its emissions from zero to one unit. C. the increase in costs associated with reducing its existing emissions by one unit. D. the lowest cost of eliminating one unit of pollution.
The table above shows the marginal costs and marginal benefits of college education. If the market for college education is perfectly competitive and unregulated, at the equilibrium quantity, the marginal social benefit is
A) zero. B) $14,000. C) $19,000. D) $16,000.
Crowding out occurs when the federal government:
A. raises taxes to finance a budget deficit. B. refinances maturing U.S. Treasury bonds. C. borrows by selling bonds to finance a deficit. D. uses a budget surplus to pay off part of the national debt.
Your firm has total sales revenue of $1,000,000 and total explicit costs of $600,000 and total implicit cost of $300,000. What will be the accounting profit for the firm? What will be the economic profit for the firm? Explain the difference using the
data. Please provide the best answer for the statement.