The figure above shows the market for the chemical hydrogen sulfide, the production of which creates an external cost. The government imposes the pollution tax shown in the figure. How much tax revenue does the government collect?
A) $640 million
B) $320 million
C) $240 million
D) more than $640 million
E) zero, because the government has taxed the firms out of business.
C
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Both price supports and a price floor can
A) create a deadweight loss. B) decrease output below the equilibrium quantity. C) decrease the price below the equilibrium price. D) increase consumer surplus. E) have no effect on producer surplus.
The Coase theorem asserts that private economic actors can solve the problem of externalities among themselves, without government intervention, regardless of whether those actors incur significant costs in reaching and enforcing an agreement
a. True b. False Indicate whether the statement is true or false
If supply and demand both increase, the new equilibrium price will be ________ and the new equilibrium quantity will be ________.
A. uncertain; higher B. higher; higher C. lower; uncertain D. lower; lower
A person observes that consumer prices often fall when a nation experiences economic growth. The person then concludes that falling consumer prices leads to economic growth. This would be an example of:
A. The fallacy of composition B. Biases C. Confusing correlation and causation D. The use of loaded terminology