Suppose two firms operate under a system of marketable pollution permits. If it costs Firm A $25 to reduce pollution by 1,000 units per day, and Firm B can reduce costs by $35 by increasing pollution by 1,000 units per day:
A. the firms cannot gain by trading the right to pollute.
B. both firms can benefit if Firm A trades the right to pollute 1,000 units to Firm B for $30.
C. both firms can benefit if Firm A trades the right to pollute 1,000 units to Firm B for $40.
D. both firms can benefit if Firm B trades the right to pollute 1,000 units to Firm A for $30.
Answer: B
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A constant rate of U.S. economic growth over a given period of years would involve
A) adding the same amount of real dollars to real GDP per capita each year. B) compounding the percentage increase in real GDP per capita over the years. C) adding the same amount of nominal dollars to real GDP per capita each year. D) None of the above are correct.
If 60 pesos can be exchanged for $5 in the foreign exchange market, which of the following represents the nominal exchange rate between the two currencies?
A) 12 dollars for 1 peso B) 5 pesos for 1 dollar C) 1 dollar for 60 pesos D) 1 dollar for 12 pesos
The graph below shows the Chamberlin model. The dd curve is based on the assumption that 
A. market demand is more elastic than the demand for any one firm. B. firms all follow each other when any one of them changes price. C. firms can gain market share by lowering their price below the price of the competition. D. firms will follow any price increases of their competitors.
According to Bernanke's policy guide, a 1/4 point decrease in long-term interest rates results in a
A. $50 billion stimulus for the economy. B. $50 billion decrease for the economy. C. $10 billion decrease for the economy. D. $10 billion stimulus for the economy.