A firm that produces chemical solvents creates some air pollution because of the emissions from its manufacturing facilities. A tax is imposed on the firm, equal to the costs of environmental damage caused by a unit of the emissions. What is the result?
A) The quantity of chemical solvents produced now will be the efficient amount.
B) Demand for the chemical solvents will increase.
C) Demand for the chemical solvents will decrease.
D) Consumers of the chemical solvents will be willing to pay the full amount of the tax, and so the quantity produced will be unaffected.
Answer: A
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In the Keynesian model, and increase in government spending financed with an increase in taxes will
a. move an economy left along its Phillips curve. b. shift the Phillips curve to the up. c. move an economy right along its Phillips curve. d. shift the Phillips curve down. e. not affect the Phillips curve.
Suppose TC = 10 + (0.1 ? q2). If p = 10, the firm's profit maximizing level of output is
A) 40. B) 50. C) 60. D) 0, since the firm will shut down.
A bank run involves a large flow of money
a. into bank depositors' accounts. b. into checking and savings accounts. c. out of depositors' accounts. d. out of individuals' cash reserves into money market funds.
A local restaurant offers an "all you can eat" buffet for $15 . Mia eats four servings but leaves half of a fifth helping uneaten. Why?
a. Her marginal value of a serving of brunch has fallen below $15. b. Her marginal value of a serving has fallen below $3 ($15 divided by 5 servings). c. Her marginal value of food has fallen to zero. d. The total value she places on the buffet exactly equals $15.