Which of the following best represents negotiation costs?
A) Dinesh has to spend time and effort to make sure that the chemical factory is living up to the agreed upon bargain that it will reduce the pollution it is releasing into the local river by 50 percent.
B) Laila needs to come up with enough cash to pay the owners of the paper manufacturing plant, its attorneys, accountants, and negotiators so that a bargain can be reached with the paper manufacturer to reduce air pollution.
C) Esperanza has to spend time and effort locating and organizing all the other people who have been adversely affected by the strong odors emanating from the local slaughterhouse in order to initiate the bargaining process.
D) Rafael has to spend time determining whether the fertilizer manufacturer, the lead smelter, or the oil refinery is the cause of pollution seeping into the groundwater in his local community.
B
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The figure above shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at $400, there is
A) a shortage of 4,000 units of rental housing. B) a shortage of 2,000 units of rental housing. C) a surplus of 3,000 units of rental housing. D) neither a shortage nor a surplus of rental housing.
Many health economists believe that health-care reform will:
a. decrease demand for new, better, and more expensive medical advances. b. lower premiums for young adults c. eliminate private health insurance entirely. d. have a very limited effect on reducing government health-care expenditures.
Which of the following is not held constant in a supply schedule?
a. production technology b. the price of the good c. the prices of inputs d. expectations
A risk-neutral monopoly must set output before it knows the market price. There is a 50 percent chance the firm's demand curve will be P = 20 ? Q and a 50 percent chance it will be P = 40 ? Q. The marginal cost of the firm is MC = Q. The profits are maximized in the expected sense when:
A. MC < E(MR). B. MC = E(MR). C. Expected value of price = E(MR). D. MC = Expected value of price.