Suppose that cigarette smokers create a negative externality. Further suppose that the government imposes a tax on cigarettes equal to the per-unit externality. What is the relationship between the after-tax equilibrium quantity and the socially optimal quantity of cigarettes?
a. They are equal.
b. The after-tax equilibrium quantity is greater than the socially optimal quantity.
c. The after-tax equilibrium quantity is less than the socially optimal quantity.
d. There is not enough information to answer the question.
a
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Alexis de Tocqueville observed in his Democracy in America: "There is no country in which everything can be provided for by the laws, or in which political institutions can prove a substitute for
A) common sense and morality."
B) economic development."
C) police and prisons."
D) supply and demand."
E) the private pursuit of private interests."
A monopolistically competitive firm finds its profit-maximizing rate of output by equating
A) the marginal revenue of advertising with the marginal cost of advertising. B) average revenue and average total cost. C) price and marginal cost. D) marginal revenue and marginal cost.
There are profit opportunities in a thin market because the gap between what a buyer is willing to pay for a true plum and the amount a plum owner is willing to accept is large.
Answer the following statement true (T) or false (F)
________ are the things that are used to produce items that satisfy people's wants.
A. Concepts B. Resources C. Costs D. Production possibilities curves