When economists propose taxes as a way to balance out the presence of externalities, they try to propose taxes:
A. on what will likely generate the most revenue.
B. on what is simplest to implement.
C. on the action that creates the externality, rather than the externality itself.
D. based on the externality itself, rather than the action that creates it.
Answer: D
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If a typical monopolistically competitive firm is making short-run losses, then
A) as some firms leave, the demand for the products of the remaining firms will become more elastic. B) other more competitive firms will enter the market. C) as some firms leave, the remaining firms will experience an increase in the demand for their products. D) the industry will eventually cease to exist.
Frederic Bastiat's, "A Petition From the Candlemakers", presents a satirical view of protectionism because
A. it pictures the sun as an unfair foreign competitor. B. it argues the government should ban all imports. C. it makes consumer preferences for foreign products the source of trade problems. D. it makes domestic workers the source of all trade problems.
Aggregation involves adding together different products and services.
Answer the following statement true (T) or false (F)
"In 2008, air travel decreased substantially despite significant reductions in ticket prices." If this information is correct, it indicates that the law of demand did not apply to air travel in 2008.
a. true b. false