Suppose the current price of a marketable permit to emit one ton of sulfur dioxide is $100 . If the marginal cost for a firm to reduce one ton of sulfur dioxide is $80, then:
a. the firm will buy the permit and emit one more ton of sulfur dioxide.
b. the firm will reduce its emissions of sulfur dioxide by one ton.
c. the firm will buy the permit and increase its emissions by 20 tons.
d. the firm will shut down.
e. the firm will be willing to pay up to $200 for a permit.
b
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The figure above shows a perfectly competitive firm. The firm is operating; that is, it has not shut down. The firm produces
A) 20 units of output and makes zero economic profit. B) 20 units of output and incurs an economic loss. C) 10 units of output and makes zero economic profit. D) 10 units of output and incurs an economic loss.
If Y = $200 billion, c = 0.75, autonomous consumption = $10 billion, and T = $20 billion, induced saving is
A) $25 billion. B) $50 billion. C) $75 billion. D) $150 billion.
Strategic complementarities may help explain business cycles because such complementarities may lead to
A) decreasing returns to scale. B) constant returns to scale. C) increasing returns to scale. D) a downward-sloping labor supply curve.
The U.S. economy is best characterized as
a. pure capitalism b. a command economy c. socialism d. a mixed capitalist economy e. market socialism