This graph shows the marginal cost and marginal benefit associated with roadside litter clean up. Assume that the marginal benefit curve and marginal cost curve each have their usual slope.
A state initiative requiring towns to spend at least $20 per day on litter removal would be ________ because ________.
A. efficient; it solves the inefficiency created by the negative externality
B. efficient; reducing litter is socially optimal
C. inefficient; the marginal cost of litter removal would exceed the marginal benefit
D. inefficient; $20 is insufficient to remove all of the litter
Answer: C
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The recent rise in the price of gasoline has caused:
A. automakers to produce more gas-efficient cars. B. automakers to drop the price of gas-efficient vehicles. C. automakers to spend more money marketing bigger vehicles. D. would not affect an automaker's supply decisions.
When more workers are hired, the firm's output expands at an increasing rate only
a. when the law of diminishing returns is operative b. under conditions of noncompeting labor markets c. if each worker's MPP is positive d. when technology is improved e. when the gains from specialization of labor outweigh all other factors affecting labor productivity
Which of the following is consistent with moving from a shortage to equilibrium in the market for foreign currency exchange?
a. the exchange rate falls so foreign residents want to buy more U.S. goods and services b. the exchange rate falls so foreign residents want to buy fewer U.S. goods and services c. the exchange rate rises so foreign residents want to buy more U.S. goods and services d. the exchange rate rises so foreign residents want to buy fewer U.S. goods and services
The authors of the text suggest that a comprehensive personal income tax with few loopholes would be efficient and equitable. What is their reasoning for this statement?
What will be an ideal response?