Assume that emissions from electric utilities contribute to pollution in the form of acid rain. Which of the following describes how this affects the market for electricity?
A) The equilibrium in the market is not efficient; consumer surplus is equal to producer surplus.
B) The equilibrium in the market is not efficient; because of the cost of the acid rain, economic efficiency would be greater if more electricity were produced.
C) A deadweight loss occurs; at equilibrium the additional social cost of production is greater than the additional benefit to consumers.
D) The equilibrium in the market is not efficient; the marginal benefit from electricity is greater than the marginal social cost.
C
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We would expect the cross-price elasticity of demand between Pepsi and Coke to be
A. negative, indicating substitute goods. B. positive, indicating substitute goods. C. positive, indicating secondary goods. D. positive, indicating general goods.
Discuss the differences between perfect and imperfect price discrimination and the benefits of each to a monopolist.
What will be an ideal response?
Economic freedom:
a. is the right to own property. b. means not having to pay taxes. c. is absent in rich countries. d. affects only poor people. e. is the ability to engage in voluntary trade.
Private investment as a share of the economy tends to be higher in countries
a. with low levels of economic freedom. b. with high levels of economic freedom. c. with economic freedom ratings near zero. d. that have experienced a sharp reduction in economic freedom during the most recent decade.