What is one reason private solutions to externalities do NOT always work?
a) Government participation in such solutions complicates the process.
b) Some parties benefit from externalities.
c) Interested parties incur costs in the bargaining process.
d) The actual costs and benefits of the problem are difficult to see.
Answer: c) Interested parties incur costs in the bargaining process.
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Suppose that your public library charges a fixed monthly membership fee of $12. Members are allowed to check out as many books as they want under this plan. The average member checks out 4 books per month
Suppose that your public library changes its policy. Now each book costs $3 to check out but there is no longer a monthly membership fee. What effect do you think the new policy will have on the total number of books checked out from your library each month? The new policy is likely to ______the number of books checked out because ________. A) leave unchanged; members have already shown that they are willing to pay $12 to check out 4 books per month B) leave unchanged; the average cost of the library service is the same under both plans C) reduce; the marginal benefit of checking out books is now lower under the new policy D) reduce; the marginal cost of checking out books is now higher under the new policy E) increase; the average benefit of checking out more than 4 books is now higher under the new policy
In his book Power and Prosperity, the economist Mancur Olson theorized that a country is better off under a dictator who maintains power for a long period, such as Mobutu, than under a short-term, unstable dictatorship
Olson maintained that, while both are very undesirable forms of government, the former is less disruptive to the economy than the latter.Discuss why this assertion may or may not be true.
Which of the following has been offered as a possible explanation to the evidence that the exchange-rate pass-through effect to import prices has been declining in developed economies?
A) That foreign exporters have been increasingly adopting "pricing-to-market" policies. B) That transaction costs have decreased in recent years. C) That global leaders have encouraged this phenomenon. D) That the share of imports with prices more sensitive to exchange rates has been increasing.
Excise taxes are a form of sales tax.
Answer the following statement true (T) or false (F)