The figure above shows the costs associated with producing paper. When paper is produced, there is some pollution runoff into a lake
According to the Coase Theorem, if the transactions costs are low and there are only a few people involved, the output will equal ________ tons of paper if ________ own the lake. A) 3; only the lakeside residents
B) 3; either the firms or lakeside residents
C) 4; the firms
D) 4; either the firms or lakeside residents
B
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What are the three key features of the financial system that result from the existence of transactions and information costs?
What will be an ideal response?
To make a market efficient in the presence of a negative externality, a tax could be imposed that is equal to the marginal
a. social cost b. private benefit c. social cost minus marginal private cost d. social cost minus marginal private benefit e. private benefit minus marginal social benefit
Which of the following equations is equivalent to the equation S - NX = I?
A. S - I = KI B. S + I = NX - KI C. S + KI = I D. S - KI = NX
Suppose the federal government had budget surpluses of $80 billion in year 1 and $120 billion in year 2 but had budget deficits of $10 billion in year 3 and $40 billion in year 4. Also assume that it used its budget surpluses to pay down the public debt. At the end of these four years, the federal government's public debt would have
A. increased by $50 billion. B. decreased by $200 billion. C. increased by $150 billion. D. decreased by $150 billion.