If liquidated damages stated in a contract are too low, inefficient breaches will be profitable, and if damages are too high, efficient breaches will not occur
Indicate whether the statement is true or false
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When a person drives an automobile, that individual is creating
A) internal costs only. B) private costs only because the individual pays for the insurance, gas etc. C) external costs only. D) social costs.
Total consumer surplus is measured by the total area under the market demand curve and below the equilibrium price
a. True b. False Indicate whether the statement is true or false
The value of a corporation typically rises when stockholders allow the corporation to reinvest its profit rather than pay out dividends
Indicate whether the statement is true or false
Corrective taxes that are imposed upon the producer of a nasty smell can be successful in reducing that smell because the tax makes the producer
a. externalize the positive externality. b. externalize the negative externality. c. internalize the positive externality. d. internalize the negative externality.