One way of addressing the associated market failure that generates both private costs and external costs is for this activity to be
A. subsidized.
B. left alone.
C. banned.
D. taxed.
Answer: D
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The problem of asymmetric information in multi-plant firms involves
A) only the problem of how to get managers to produce as much as possible. B) only the problem of how to get managers to produce the amount the larger firm wants them to, whether it be a lot or a little. C) both the problem of how to get managers to produce the appropriate amount and the problem of how to get them to accurately report their capacity. D) both the problem of how to get managers to produce the appropriate amount and the problem of how to get them to not sell that output outside of the firm. E) both the problems of vertical and horizontal integration with the rest of the firm.
According to a royal investigation in 1623 of the English colonies in Virginia, the average life expectancy of newly arrived setters was
a. 2 years. b. 5 years. c. 10 years. d. 20 years.
A tax on productive activity tends to
a. increase formal market activity because it decreases prices b. decrease formal market activity because it increases work incentives c. decrease formal market activity because it lowers the return on such activity d. decrease activity in the underground economy because people are afraid of being connected with tax fraud e. increase activity in the underground economy because people are afraid of being connected with tax fraud
Chelsea wants to start her own Christmas ornament business. She can purchase a suitable factory that costs $100,000 . Chelsea currently has $150,000 in the bank earning 3 percent interest per year. Suppose Chelsea purchases the factory using $50,000 of her own money and $50,000 borrowed from a bank at an interest rate of 6 percent. What is Chelsea's annual opportunity cost of purchasing the
factory? a. $2,000 b. $3,000 c. $4,500 d. $5,000