Suppose the market for oranges is perfectly competitive and unregulated. Suppose also that the chemicals used to keep the oranges insect-free damage the environment by an estimated $1 per bushel of oranges. Suppose QD = 1000 - 100P and QS = -100 + 100P. The price consumers would have to pay for the market to achieve the socially optimal level of production is
a. 5
b. 5.5
c. 6
d. 6.5
c
You might also like to view...
Which of the following methods of restricting trade does NOT create a deadweight loss?
A) a tariff B) a quota C) a voluntary export restraint D) Both answers A and B are correct. E) None of the above answers is correct because all the methods create a deadweight loss
Abandoned or underdeveloped real properties whose development is complicated by contamination are referred to as
a. NPL sites b. Superfund sites c. brownfield sites d. RCRA sites
The monetarists believed that if the money supply was increased during a recession, people would ____________.
Fill in the blank(s) with the appropriate word(s).
Suppose you have $200 with which you can buy shares of stock from two companies: ABC Hot Chocolate Company and XYZ Lemonade. Each company's stock currently sells for $100 per share. If the temperature next year is lower than average, the stock price for ABC will increase by $20, and the stock price for XYZ will not change. If the temperature next year is higher than average, the stock price for XYZ will increase by $20, and the stock price for ABC will not change. There is a 50 percent chance that it will be colder than average next year, and a 25 percent chance that it will be warmer than average. If you purchase two shares of XYZ stock and no shares of ABC stock, your expected gain will be ________.
A. $20 B. $30 C. $10 D. $0