An emissions fee equal to the optimal Pigouvian tax on coal has the effect of _____________ the externality associated with the burning of coal, while ensuring that the marginal benefit of pollution _________ the marginal cost of pollution.
a. worsening, equals
b. lessening, is greater than
c. internalizing, is less than
d. internalizing, equals
Ans: d. internalizing, equals
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Starting from long-run equilibrium, an increase in autonomous consumption results in ________ output in the short run and ________ output in the long run.
A. higher; higher B. higher; potential C. lower; higher D. lower; potential
As demand and supply become more elastic, taxes reduce market output more and raise less tax revenue. ?
Answer the following statement true (T) or false (F)
The magnitude of the slope of the budget line
A) is defined as marginal rate of substitution. B) equals the relative price of the good measured along the horizontal axis. C) increases when income increases. D) decreases when income increases.
When there is an excess of expected net income over the cost of capital
A) abnormal net income is positive. B) accounting profits are negative. C) abnormal net income is negative. D) economic profits minus abnormal net income is negative.