Marissa owns a small cottage by the lake. Big Boy’s Sawmill is next door, and it dumps sawdust into a sinkhole it owns. Unfortunately for Marissa, the sinkhole opens into a brook on her land, which gets clogged by the sawdust. It costs Marissa $3,000 per year to clean up the sawdust. Big Boy’s can dispose of the sawdust by having it hauled away for $2,000 per year. Marissa offers to pay Big Boy’s $2,500 per year to have the sawdust hauled away. In this example of the Coase theorem, what is the result if Big Boy’s accepts Marissa’s offer?
a. Both parties benefit.
b. Big Boy’s suffers while Marissa benefits.
c. Both parties suffer.
d. Marissa suffers while Big Boy’s benefits.
a. Both parties benefit.
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According to the efficient markets hypothesis, the difference between today's price for a share of stock and tomorrow's price is
A) predictable given currently available information. B) equal to today's price minus yesterday's price. C) unforecastable. D) zero.
Which of the following could explain an increase in labor supply to a particular labor market?
a. a reduced preference for this type of work b. a decrease in the size of the population c. an increase in the number of firms in the market d. a rightward shift of the marginal revenue product curve for labor at a typical firm e. a reduction in wage rates for similar types of work
As the price level decreases real GDP demanded increases because
A. consumer wealth increases. B. net exports decrease. C. interest rates decrease and cause lower investment. D. net exports are indeterminant .
Delete
a. The monopolist undersupplies the market and charges too high a price. b. The monopolist is a revenue maximizer not a profit maximizer. c. A monopolist has little incentive to produce efficiently (at a low cost). d. All of the above are true.