The level of pollution at which the marginal benefits equal the marginal cost of cleaning up is always
A. the pollution maximum.
B. the pollution minimum.
C. the optimal quantity of pollution.
D. the zero pollution level.
Answer: C
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In the short run, a firm has fixed costs but never any variable costs.
Answer the following statement true (T) or false (F)
Gasoline and motel rooms are complements for many consumers. When the price of gasoline declines, consumers take longer vacations and rent more motel rooms. Therefore, the cross price elasticity between gasoline and motel rooms is
A. positive. B. negative. C. less than one because neither is a luxury. D. more than one because both are luxuries.
Which of the following leads to monopolistic competition?
a. Fluctuation in the price of a product during a particular year b. The variety of styles, flavors, locations, and characteristics associated with a product c. A change in the total number of firms producing an identical product d. Government intervention in the form of license and quality control associated with a product
To reduce the effects of crowding out caused by an increase in government expenditures, the Federal Reserve could
a. increase the money supply by buying bonds. b. increase the money supply by selling bonds. c. decrease the money supply by buying bonds. d. increase the money supply by selling bonds.