There are two coal-burning electrical utilities—one in tiny, rural Wanunu, Montana, and another in metropolitan Detroit, Michigan—and each produces the same amount of pollution per unit of output. If a permit tax is going to be used to force these
firms to internalize pollution costs, the tax levied should be
A) the same in each city.
B) higher in Wanunu than in Detroit.
C) higher in Detroit than in Wanunu.
D) less than zero in each city.
Answer: C
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Governments provide public goods because it has which of the following?
a. The ability to force people to use the public good b. Better information about what types of public goods people want c. The ability to ask all the citizens to help pay for the public good d. The ability to force people to pay taxes to cover the cost of the public good
Which of the following tends to make the size of a shift in aggregate demand resulting from a tax change smaller than would otherwise be the case?
a. the multiplier effect b. the crowding-out effect c. expansionary monetary policy d. None of the above is correct.
Monopolistically competitive markets are different from perfectly competitive markets because in monopolistically competitive markets, firms:
A. have some control over price, while in perfectly competitive markets firms have no control over price. B. face substantial barriers to entry, while in perfectly competitive markets firms face no significant barriers to entry. C. have no control over price, while in perfectly competitive markets firms have some control over price. D. sell a standardized product, while in perfectly competitive markets firms sell a differentiated product.
According to the law of demand, the quantity demanded of a good is related to
A) the average price of all goods. B) income. C) any factor that affects the decision of an individual consumer but not the market. D) the relative price of that good.