Sulfur Dioxide Discharged (Tons)Firm AFirm B10$8,000$9,000910,00012,000815,00018,000720,00027,000628,00037,000Table 16.3Table 16.3 shows the production cost for two utilities at different levels of sulfur dioxide emissions. Assume that the government issued 8 marketable pollution permits to each firm. If the two firms agree to swap one permit and split the difference between the willingness to pay and willingness to accept, what is the price of a permit?
A. $4,500
B. $5,500
C. $7,250
D. $9,750
Answer: B
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Suppose that the average total cost of producing 5,000 Corvettes is $30,000 and the average total cost of producing 10,000 Corvettes is also $30,000 . Assuming this cost structure continues to hold, what can you say about the change in General Motors' total cost of Corvette production when they make the 10,001st car?
a. The total cost of production does not change at all. b. The total cost of production will increase by the average variable cost of the next car. c. The change is negative because there are diseconomies of scale. d. There is not enough information to answer this question. e. The total cost of production will increase by $30,000.
A usury rate is like a price ceiling
a. True b. False Indicate whether the statement is true or false
Airlines that charge higher prices for customers who purchase their tickets at the last minute are:
A. perfect price discriminators. B. lowering total economic surplus. C. price discriminating by identifying passengers with higher reservation prices. D. not price discriminating because the cost of the ticket is not the same.
Which of the following statements is true?
A. The United States today comes closer to the socialist form of economic organization than it does capitalism. B. When central planners set prices above equilibrium for goods and services they create shortages. C. According to Karl Marx, under capitalism, workers would be exploited and would revolt against the owners of capital. D. Adam Smith argued that government's role in society would be to do absolutely nothing.