Under a marketable pollution permit system, property rights to an externality are created so that a more efficient allocation of resources will result
a. True
b. False
Indicate whether the statement is true or false
True
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If the average total cost of producing 20 sweaters an hour falls when the firm doubles all its inputs, then the
A) short-run average total cost curve shifts upward because all inputs have increased. B) firm moves along its short-run average total cost curve. C) firm experiences economies of scale. D) long-run average cost curve shifts downward.
Rational ignorance
A) refers to attempts by special interests to use government action to make themselves better off at the expense of others. B) explains the Arrow impossibility theorem. C) helps to explain why rent seeking by special interest groups occurs. D) explains why consumers ignore sunk costs when they vote.
When the housing bubble popped, the effect of the negative demand side shock and the negative supply side shock were the same on:
A. output, causing it to definitely decrease. B. prices, causing them to definitely rise. C. output, causing it to definitely increase. D. prices, causing them to definitely fall.
The government budget constraint tells us that the budget deficit is equal to
A) interest on the debt. B) the primary deficit. C) the primary deficit plus interest on the debt. D) imports minus exports. E) the primary deficit plus the trade deficit plus interest on the debt.