In the Flint Hills area of Kansas, proposals to build wind turbines to generate electricity have pitted environmentalist against environmentalist. Members of the Kansas Sierra Club support the turbines as a way to reduce use of fossil fuel, but local chapters of the Nature Conservancy say they will befoul the landscape. An argument that supports the Sierra Club position is that that wind turbines:
A. are a way of solving a free rider problem.
B. create a free rider problem.
C. reduce negative externalities elsewhere in the economy.
D. internalize negative externalities.
Answer: C
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Which of the following statements is false?
A. Another term for a Treasury bill is a T-bill. B. Treasury notes mature in 2 to 10 years. C. Treasury bonds are considered very safe investments, but Treasury bills are considered to be a more risky investment. D. It is unlikely the federal government will default on its bond obligations.
To correct for the social impact of pollution, the government should levy a per-unit tax
A) that is the same for all polluters regardless of their locations or sizes. B) according to the economic damage of the pollution. C) according to the business activity of the polluter. D) only to those polluters that can afford to pay for the tax.
In a perfectly competitive market, the type of decision a firm has to make is different in the short run than in the long run. Which of the following is an example of a perfectly competitive firm's short-run decision?
A) the profit-maximizing level of output B) how much to spend on advertising and sales promotion C) what price to charge buyers for the product D) whether or not to enter or exit an industry E) whether or not to change its plant size
When the price of popcorn falls, before there is any change in consumption, the
A) marginal utility of popcorn definitely increases. B) marginal utility per dollar from popcorn definitely increases. C) total expenditure on popcorn definitely rises. D) entire total utility of popcorn curve definitely shifts rightward.