If firms were forced to take into account the full social costs of production, then
A) output would decrease but pollution levels would probably remain at the same levels.
B) output would be unaffected but pollution levels would come down.
C) output and pollution levels would decrease.
D) output could be increased and pollution levels would decrease.
C
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In the above figure, the shift from AD1 to AD2 might have been the result of
A) an increase in government expenditure. B) a decrease in taxes. C) an increase in the quantity of money. D) All of the above answers are correct.
If a negative externality exists, __________ in order for the socially optimal output to be reached.
A. supply needs to increase B. supply needs to decrease C. demand needs to increase D. b and c E. none of the above
Which of the following is true with regard to minimum wages? a. A minimum wage does little to alleviate poverty
b. A minimum wage helps deal with the problem of poverty. c. A minimum wage leads to a surplus or unemployment in the skilled labor market. d. A minimum wage adversely affects the unskilled laborers between the age group 40 and 45. e. A minimum wage helps provide employment to teenagers and improve their standard of living.
If Ana devotes all her time to making fudge, she can make 3 pounds of fudge an hour, and if she devotes all her time to making toffee, she can make 2 pounds of toffee an hour. If Leo devotes all his time to making fudge, he can make 4 pounds of fudge an hour, and if he devotes all his time to making toffee, he can make 5 pounds of toffee an hour. According to The Principle of Comparative Advantage, Ana and Leo will be able to produce more overall if:
A. Ana specializes in fudge and Leo specializes in toffee. B. the Principle of Comparative Advantage does not hold in this example. C. Leo specializes in fudge and Ana specializes in toffee. D. both Leo and Ana specialize in fudge.