Answer the following statement(s) true (T) or false (F)
1. The major categories of market instruments are: pollution charges, deposit/refund systems, subsidies, and pollution permit trading systems.
2. A payment or tax concession aimed at lowering the cost of abating is called a pollution charge.
3. Because polluters ignore the MEC of environmental damage linked to the production of a good, too few resources are allocated to producing that good.
4. A pollution charge follows the “polluter-pays principle.”
5. If production of a good generates an environmental negative externality, the effect of that externality is captured by the MEC of production.
1. True
2. False
3. False
4. True
5. True
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Suppose the equilibrium price of cotton is $100 per ton. A price support set at ________ than $100 per ton ________
A) less; increases producer surplus B) less; increases consumer surplus C) more; increases consumer surplus D) more; decreases marginal cost E) more; creates a surplus that the government must buy
Potential GDP is the
A) the maximum amount of production that can be produced while avoiding shortages of labor, capital, land, and entrepreneurship that would bring rising inflation. B) current value of production in the economy. C) value of production when the economy is in a recession. D) value of production when the economy is at a peak.
Which of the following would cause an increase in the price of gasoline and an expansion in the equilibrium quantity?
a. an increase in the price of crude oil, a key ingredient required for the production of gasoline b. the introduction of a miracle carburetor that substantially improves the gas mileage of automobiles c. a recession that substantially reduces the income of households d. an increase in the popularity and use of Sport Utility Vehicles that consume a lot of gasoline per mile driven
The Federal Reserve System is an example of a ______ bank.
a. savings b. central c. foreign d. commercial