Refer to Figure 28.2. Assume this firm initially has marginal costs equal to Private MC1 and is polluting. If the government decides to use emission charges to reduce pollution, the firm's MC curve will shift to
A. MC3 and the rate of output will increase.
B. MC2 and the rate of output will decrease.
C. MC2 and the rate of output will increase.
D. MC3 and the rate of output will decrease.
Answer: D
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The excludability versus nonexcludability issue is
A. relevant to the issue of market failure. B. not relevant to the issue of market failure. C. relevant to the free-rider problem. D. a and c E. b and c
Max has allocated $100 toward meats for his barbecue. His budget line and an indifference map are shown in the above figure. What happens if Max's mother gives him 30 pounds of burger?
A) Max would have preferred receiving the dollar-value of the burger. B) Max is indifferent between this gift and the dollar-value of the burger. C) Max prefers this gift to the dollar-value of the burger. D) None of the above.
You are impressed with a $60,000 Porsche and decide to buy one yourself. You end up paying a 20 percent customs duty and 10 percent in sales tax. These taxes are
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