According to the Coase theorem,
a. government intervention is necessary in order to solve an externality problem
b. an externality is a form of market failure
c. under certain conditions, the private market will solve externality problems efficiently
d. the private market will usually solve externality problems, except when side payments are necessary
e. negative externalities are less efficient that positive externalities
C
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Personal income does not include
a. transfer payments. b. capital consumption allowance. c. dividends. d. interest income.
If the construction of a new elementary school would create $5 million worth of benefits for citizens and cost $7 million to construct, then using the criterion of economic efficiency, the school
a. should be built. b. should not be built. c. results in a substantial improvement to the welfare of society. d. should be built if it passes by a majority vote.
If the demand for computer scientists increases relative to their supply,
a. the wages of computer scientists will decline. b. a computer science major will be more attractive to college students. c. the employment of computer scientists will fall. d. there will be a surplus of computer scientists.
The primary advantage to selling pollution permits rather than using a fixed percent reduction for all firms is that:
A. enforcement costs are eliminated. B. the government can raise additional revenue. C. pollution reduction is accomplished in the least costly way possible. D. pollution is driven to zero.