Why is the optimal quantity of pollution not less than the point at which the marginal benefit equals the marginal cost?
A. Below that point the value that people place on less pollution is less than the cost of reducing the pollution.
B. Below that point firms will have to reduce the quantity that they are currently producing and lower the price.
C. The point of intersection occurs at a low level of pollution.
D. There are no external costs below that level.
Answer: A
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Positive spending shocks lead to ________ inflation ________
A) higher; in both the short and long runs B) higher; in the short run but not in the long run C) lower; in both the short and long runs D) lower; in the short run but not in the long run
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