Consider a competitive industry in which a "green" company uses a cleaner but costlier production method than is used by other firms. In the long run, the "green" company will:
a. earn more profit than will the typical firm in the industry.
b. drive its competitors out of business.
c. have economic losses and exit the industry.
d. charge a higher-than-average price for its product.
c
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(i) How many videos does Spencer rent each year? How much consumer's surplus does Spencer receive from renting videos? (ii) Blockpopper's starts a "frequent viewers" club. For a membership fee of $35 per year, club members can rent as many videos as they wish at the discounted price of $2 per rental. Should Spencer join the "frequent viewers" club? If yes, how much surplus value would Spencer receive as a club member? If no, what membership fee would Spencer be willing to pay to join the club?
(i) The accompanying diagram shows the effects of a tariff. Initially, the price is P0, domestic firms produce Q0 units, and Q1 - Q0 units are imported from foreign firms. When the tariff is imposed, the price increases to P0 + t.
How does the tariff affect consumers' surplus and producers' surplus? How much tariff revenue is collected by the government? Does imposing the tariff cause the country's social gain to rise or fall?
(ii) The situation in part i is known as the "small country" case-the country has no market power, so its tariff does not affect the world price P0. Now consider the "large country" case shown in the accompanying diagram-in this case, the country has market power, and the tariff (by reducing the demand for imports) causes the world price to fall from P0 to P1. So after the tariff is imposed, the domestic price is P1 + t.
How does the tariff affect consumers' surplus and producers' surplus in this situation? How much tariff revenue is collected by the government? When a "large country" imposes a tariff, will its social gain rise or fall?
A decrease in both the equilibrium price and the equilibrium quantity of rice is best explained by a(n):
A. decrease in the supply of rice. B. increase in the demand for rice. C. decrease in the demand for rice. D. increase in the supply of rice.
The downward sloping labor demand curve demonstrates that as the ________ increases the ________ decreases
A) nominal wage; amount of labor supplied B) real wage; amount of labor supplied C) real wage; amount of labor hired D) nominal wage; amount of labor hired
The people of the Island of Yap used stones as a general medium of exchange. Therefore,
A) their economic system was based upon barter. B) their stones served as money. C) they had no price system, because prices can't be measured with stones. D) inflation was impossible.