Pollution
A. is absent in a free market economy.
B. exists because air and water are privately owned resources.
C. is increased when property rights are defined.
D. creates a negative externality.
Answer: D
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A tax meant to counter the effect of a negative externality is called:
A. a Coase tax. B. a Pigovian tax. C. an external tax. D. a social benefit tax.
Nonsmoking sections in restaurants are designed to
a. prevent third parties from causing a market failure b. increase demand by achieving market equilibrium c. prevent free riders from incurring a negative externality d. prevent third parties from incurring a negative externality e. achieve market equilibrium which cannot be achieved without the designated sections
Carefully define the following terms and explain their importance to the study of economics
a. specialization b. absolute advantage c. comparative advantage d. quota e. trade adjustment assistance
Does a tax on sellers affect the demand curve?
A. No, there is change in the quantity demanded, but the demand curve does not move. B. Yes, it shifts to the left by the amount of the tax. C. Yes, it shifts to the right by the amount of the tax. D. Yes, it shifts up by the amount of the tax.