Each citizen in a small town suffers 5 units of irritation for each bushel of leaves burned in the town. The charge for hauling a bushel of leaves to the land fill is a fee equal to 20 units of irritation. There are 25 people in the town, each of whom minimizes personal irritation and has 10 bushels of leaves. How much irritation is the most efficient amount for each person in the town to absorb?
What will be an ideal response?
Since each person would experience only 200 units of irritation if everyone hauled their leaves to the landfill it is far more efficient to experience 200 units of displeasure than 1250.
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Which of the following is an important side effect of government licensing and other grants of monopoly power?
a. The number of options available to consumers is increased. b. Competition is enhanced. c. Firms will produce more efficiently. d. Rent-seeking is encouraged.
Judging from the circular flow diagram, what happens to dollars that households earn as wages?
a. They are given to other households in the form of tax distributions.
b. They are given to firms in exchange for capital and labor.
c. They are recycled back to firms when households buy products and services.
d. They are removed from the simple circular flow diagram, making the circle smaller.
A charity that used to offer contributors private goods such as coffee mugs, books, or magazine subscriptions, but no longer does, is likely to ________ the free-rider problem and lead to a ________ level of contribution to the public good.
A. increase; smaller B. increase; larger C. reduce; smaller D. reduce; larger
Stock options perfectly align management incentives with incentives of owners
Indicate whether the statement is true or false