If the marginal cost of reducing pollution is positive, then:
A. the optimal amount of pollution is zero.
B. the marginal benefit of reducing pollution is zero.
C. the optimal amount of pollution is greater than zero.
D. pollution should be reduced as much as technically feasible.
Answer: C
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Answer the following statement(s) true (T) or false (F)
1. The spending needed to maintain the utility level of society to compensate for resources used to achieve a cleaner environment is referred to as explicit environmental costs. 2. Marginal social cost is equivalent to the sum of the market-level marginal abatement costs and the government’s marginal cost of enforcement. 3. Marginal social cost (MSC) of some abatement level, A1, can be determined as the area under the total social cost (TSC) function up to A1. 4. The area under the MSC from the origin up to some abatement level, A0, is the TSC of abating A0 units. 5. The marginal social cost (MSC) curve linked to environmental policy is captured by the supply of the public good, environmental quality.
When the aggregate demand curve shifts,
A) the inflation rate does not change. B) there is a movement along the short-run Phillips curve. C) there is a change in potential GDP. D) there is a change in the natural unemployment rate. E) the short-run Phillips curve shifts.
People who "sell short" are selling goods
A) at below-market prices. B) of poor quality. C) to purchasers who cannot afford to pay for them. D) they do not yet own. E) with the expectation of buying them back again.
Suppose Ernie gives up his job as financial advisor for P.E.T.S., at which he earned $30,000 per year, to open up a store selling spot remover to Dalmatians. He invested $10,000 in the store, which had been in savings earning 5 percent interest. This year's revenues in the new business were $50,000 . and explicit costs were $10,000 . Calculate Ernie's economic profit
a. $10,000 b. $50,000 c. $20,000 d. $40,000 e. $9,500