In order to internalize the externality due to pollution, the government should impose a tax based on
A) the economic damage associated with the pollution.
B) the physical amount of pollution.
C) the size of the firm causing the pollution.
D) the value of the pollution-causing business activity.
Answer: A
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In which of the following situations will total revenue increase?
a. Price elasticity of demand is 1.2, and the price of the good decreases. b. Price elasticity of demand is 0.5, and the price of the good increases. c. Price elasticity of demand is 3.0, and the price of the good decreases. d. All of the above are correct.
The accompanying table describes the relationship between the number of workers hired by a call center each hour and the number of calls the call center can make each hour. The call center has only 1 telephone. The telephone costs the firm $5/hour (regardless of how many calls are made), and each worker is paid $10 per hour.Calls Per HourNumber of Telephones Per HourNumber of Workers Per Hour11221461616182211024112 Given the information in the table above, what is the call center's marginal cost when it goes from making 6 to 16 calls an hour?
A. $10 B. $2 C. $20 D. 50 cents
Suppose the Fed raises the federal funds rate. Describe the ripple effects of this monetary policy. Other short-term interest rates and the exchange rate ________. The quantity of money and supply of loanable funds ________.
Fill in the blank(s) with the appropriate word(s).
Joe runs a business and needs to decide how many hours to stay open. Figure 2.2 illustrates his marginal benefit of staying open for each additional hour. Suppose that we observe Joe staying open 3 hours per day. If he is following the marginal principle, what must his marginal cost per hour be?
A. $24 B. $32 C. $40 D. $48