Suppose the production of cotton causes substantial environmental damage because the pesticides used by cotton farmers often make their way into nearby rivers and streams, and are very harmful to fish and other wildlife. If cotton farmers do not have to pay for the environmental damage caused by the pesticides used to grow cotton, then the market equilibrium price will be ________ and the market equilibrium quantity will be ________.
A. inefficiently low; inefficiently high
B. inefficiently low; inefficiently low
C. inefficiently high; inefficiently low
D. inefficiently high; inefficiently high
Answer: A
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What accounts for specialization?
a. People specialize in the activity in which their opportunity costs are at a maximum. b. People specialize in the activity in which their opportunity costs are lowest. c. People do not specialize in any activity. d. People specialize in the activity that pays the highest wage. e. People specialize in the activity that they enjoy the most, no matter what the salary is.
Which of the following is an example of political action that reflects the shortsightedness effect?
a. budget surpluses b. the promise of future benefits without providing for their funding c. spending on roads and highways d. spending on programs that transfer income from the rich to the poor
In a period of inflation real interest rates will be greater than nominal interest rates
a. True b. False Indicate whether the statement is true or false
A major benefit of a health savings account is that it
A) combats moral hazard. B) means more health care services will be demanded. C) eliminates rising health care costs. D) creates the incentive to see a doctor regularly.