Hotelling's rule states that
a. The net price of a resource is constant
b. The net price of a resource rises at a rate equal to the interest rate
c. The net price of a resource declines at a rate equal to the interest rate
d. The price of a resource depends on the allocation of property rights
e. The price of a resource is efficient as long as all user costs are internalized
Ans: b. The net price of a resource rises at a rate equal to the interest rate
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The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $4.00 to $3.50, then total revenue would ________ because demand is ________
A) decrease; elastic B) increase; elastic C) decrease; inelastic D) increase; inelastic
The above figure shows the marginal benefit to a firm of polluting in the local river while producing its output, and the marginal cost to the surrounding neighbors. The marginal cost of production is zero for the firm
According to Coase's Theorem, which of the following scenarios is most likely to lead to the socially optimal level of pollution? A) The firm owns the river and there are a thousand surrounding neighbors. B) The firm owns the river and there is just one nearby neighbor. C) The river is jointly owned by one thousand surrounding neighbors. D) The firm owns the river, and therefore produces the social optimum no matter what.
Which of the following will result in the money market when the price level in an economy rises, while the supply of money remains unchanged? a. The demand for money will decrease
b. The supply of money will increase. c. The rate of interest will decrease. d. The total investment spending in the economy will increase. e. The rate of interest will increase.
An international agreement reached in 1994 by the world's trading nations provides for:
A. an increase in export subsidies on agricultural products. B. an increase in agricultural price supports. C. a reduction of tariffs on agricultural products. D. an international research organization designed to discover nonfood uses of agricultural output.