Refer to the figure below. If negotiation is impractical, the socially optimal level of production can be achieved by:
A. imposing a tax on paper equal to the external cost.
B. subsidizing paper by the amount of the the external benefit.
C. compensating those injured by the externality.
D. banning production of paper.
Answer: A
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Answer the following statement(s) true (T) or false (F)
1. The major reason education leads to higher wages is due to signaling. 2. Attending college can be seen as an individual’s attempt to raise their level of human capital. 3. Since mowing ones lawn is not done at their workplace, it is viewed as a use of their leisure time and thus (somewhat paradoxically) falls into the category of leisure. 4. One deficiency of labor-leisure indifference curve analysis is that because indifference curves are always tangent to the worker’s budget line, the model can not explain why some people choose not to work. 5. A firm’s marginal revenue product of labor equals the marginal product of labor times the cost per unit of the labor.
Refer to Table 11-3. The table above refers to the relationship between the quantity of workers employed and the number of cardboard boxes produced per day by Manny's House of Boxes. The capital used to produce the boxes is fixed
Diminishing returns to labor are first observed in this example after Manny hires the ________ worker. A) second B) third C) fourth D) fifth
In most business situations where firms compete, often they can escape the prisoner's dilemma and reach the most profitable outcome. Which of the following is a reason for this?
A) Most games are repeated games and firms can employ retaliation strategies against those who do not cooperate. B) Most games are one-shot games so firms learn from their mistakes. C) Firms are constantly improving their products and anticipating changing consumer tastes. D) Firms engage in aggressive advertising to overcome the barriers to loyalty.
Two goods are substitutes when a decrease in the price of one good
a. decreases the demand for the other good. b. decreases the quantity demanded of the other good. c. increases the demand for the other good. d. increases the quantity demanded of the other good.