Both Wisconsin and Illinois border Lake Michigan. The lake is becoming polluted, and both states are deciding whether or not to clean it. If Wisconsin decides to clean the lake, it will cost $1,200 and generate social benefits of $1,500 . However, Wisconsin will receive only $1,100 of those social benefits, while neighbor Illinois will receive the other $400 . If Illinois cleans the lake, it will
cost $700 and generate social benefits of $900 . However, Illinois will receive only $600 of those benefits, while Wisconsin will receive the remaining $300 . If either state does not clean the lake, it experiences a cost of $0 . If Wisconsin does not clean the lake and Illinois does, then _____.
a. Wisconsin gains $200 and Illinois gains $100
b. Wisconsin gains $200 and Illinois loses $100
c. Wisconsin gains $300 and Illinois loses $100
d. Wisconsin gains $300 and Illinois gains $100
c
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An information cascade occurs when:
A) the buyer of a good has more information than the seller and takes hidden actions. B) the seller of a good has more information about the hidden characteristics of the good. C) people make the same decisions as others without focusing on private information. D) people have contradictory information about a good they want to consume.
The aggregate production function is _____ because the rate of increase of output per capita diminishes as more capital is used
a. downward sloping b. convex from below c. concave from below d. inverted U-shaped
According to new growth theory, technological advances can be promoted
A) from within the economy. B) if only the right fiscal and monetary policies are in place. C) in a few rare cases. D) through industrial policy. E) none of the above
The location of the product supply curve depends on the:
A. production technology. B. number of buyers in the market. C. tastes of buyers. D. location of the demand curve.