Robert Nozick asserts that fairness and efficiency result if
A) there are price ceilings in the market.
B) there are external benefits and external costs in the market.
C) voluntary exchange occurs.
D) public goods are provided by government.
C
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Figure 15-1
Figure 15-1 describes conditions in the monopolized weezil industry. In the absence of government intervention, the monopolist will produce an output equal to
A. W. B. X. C. Y. D. Z.
Refer to Figure f. A benefit function is plotted in Figure f. The distance C represents the:
A. risk premium of the consumption bundle.
B. expected utility of the consumption bundle.
C. certainty equivalent of the consumption bundle.
D. expected consumption.
A profit-maximizing, price-taking firm should cease production whenever: a. the firm is making a loss
b. the firm is earning zero economic profit. c. the price is less than minimum average fixed cost. d. the price is less than minimum average variable cost.
Marissa owns a small cottage by the lake. Big Boy’s Sawmill is next door, and it dumps sawdust into a sinkhole it owns. Unfortunately for Marissa, the sinkhole opens into a brook on her land, which gets clogged by the sawdust. It costs Marissa $3,000 per year to clean up the sawdust. Big Boy’s can dispose of the sawdust by having it hauled away for $2,000 per year. Marissa offers to pay Big Boy’s $2,500 per year to have the sawdust hauled away. In this example of the Coase theorem, what is the annual pecuniary cost to society of negative externality before any transaction occurs between Marissa and Big Boy’s?
a. $2,000 b. $2,500 c. $3,000 d. $5,000