A pollution tax:
A. is a method used to internalize external costs.
B. will not affect the price of the good being produced.
C. does not affect the quantity of a good demanded.
D. is a method used to externalize internal costs.
Answer: A
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Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. Suppose Country A specializes in bananas, and Country B specializes in tomatoes. The limits to the terms of trade that Country B would find acceptable are Country B will accept no:
A. more than 3 bananas for each tomato. B. less than 3 bananas for each tomato. C. more than 1 tomato for every 3 bananas. D. less than 1 tomato for every 3 bananas.
Unemployment refers to a situation in which an individual: a. prefers part-time work rather than full-time work
b. has given up looking for a job because he is discouraged about his prospects. c. is looking for a job but is unable to find one. d. is jobless and also not looking for a job.
If the demand for cucumbers falls when the price of tomatoes rises, then we know that tomatoes and cucumbers are:
A. substitutes. B. normal goods. C. complements. D. inferior goods.
Securitization, the process of forming new securities by bundling or slicing up groups of securities like mortgages and bonds, is:
A. A way of reducing risk though diversification B. Well-understood by financial analysts and managers who engaged in it C. Considered shady by legitimate financial institutions D. Still only a minor portion of the modern financial system