Money eliminates the need for a coincidence of wants in trading primarily through its role as a:
A. Unit of account
B. Medium of exchange
C. Store of value
D. Medium of deferred payment
B. Medium of exchange
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In the multiple-polluter case for a pollution permit system, suppose two firms, X and Y, face marginal abatement costs of MACX = 1.2AX and MACY = 0.4AY, respectively. To meet water quality standards, the government issues each firm pollution permits such that each firm must abate 20 units of pollution. If permit trading were allowed,
a. firm X would have an incentive to buy a permit as long as the price were less than $24 b. firm Y would be willing to sell a permit as long as the price were less than $8 c. at a permit price of $22, firm X would have an incentive to buy, but firm Y would have no incentive to sell d. no trading would take place because neither firm has an incentive to trade based on this model
Without any regulation, the natural monopolist will
A) not produce any output. B) produce to the point at which P = ATC. C) produce less output than it would if the industry was purely competitive. D) have an upward-shifting average cost curve.
We would expect unions to have a more difficult time negotiating higher wages for their members when
A) labor represents a small portion of total costs. B) the product produced makes up a small portion of families' budgets. C) the product produced has several close substitutes. D) there are not good substitutes for labor in the production process.
A monopolistic competitor that earns profits in the current period is likely to expect: a. a loss in the future due to diseconomies of scale
b. the entry of firms with similar yet differentiated products in the long run. c. higher profits in the future due to barriers to entry. d. entry of new firms with identical products.