Which of the following would illustrate an example that leads to high transaction costs when dealing with pollution?
a. air quality in New York City
b. water pollution caused by a large number of firms at a location near the same river
c. noise pollution from aircraft near a busy airport
d. all of the above
D
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Bonds with relatively low risk of default are called ________ securities and have a rating of Baa (or BBB) and above; bonds with ratings below Baa (or BBB) have a higher default risk and are called ________
A) investment grade; lower grade B) investment grade; junk bonds C) high quality; lower grade D) high quality; junk bonds
During a typical recession in the United States,
A) investment expenditures usually decrease at the same rate as consumption expenditures. B) investment expenditures usually decrease, while consumption expenditures usually increase. C) investment expenditures usually decrease much more than consumption expenditures. D) investment expenditures usually decrease less than consumption expenditures.
The general form for discounting is
A. PV = (1 + i)t/FVt. B. PV = FVt * (1 + i)t. C. PV = 1/(1 + it)t. D. PV = FVt /(1 + i)t.
Related to the Economics in Practice on page 3: According to the Economics in Practice, when rains in rural India are plentiful, the opportunity cost of having someone out of the labor force, and therefore unable to work in agricultural production,
A. increases. B. remains unchanged. C. is zero, because the person is out of the labor force. D. decreases.