Suppose an oil refinery and a paper mill both pollute a river. Under a system of marketable pollution permits, which of the following must be true in order for both companies to benefit from trading the right to pollute?
A. They must be able to reduce pollution at exactly the same cost.
B. It must cost the firms different amounts to reduce pollution.
C. They must have a social conscience and must be devoted to pollution abatement.
D. The government must direct them toward beneficial trades.
Answer: B
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In year 2000 dollars, per pupil expenditures on education in the United States in 1940 was around _____
a. $500 b. $1000 c. $2000 d. $4000
______________ is another term for perfect elasticity.
a. Zero elasticity b. Infinite elasticity c. Constant unitary elasticity d. Zero inelasticity
Exhibit 9-6 Keynesian aggregate expenditure model when the MPC is 2/3
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The economy shown in Exhibit 9-6 has a recessionary gap of:
A. $1 trillion. B. $2 trillion. C. $3 trillion. D. $5 trillion.
An $18 billion increase in spending creates $18 billion of new income in the first round of the multiplier process and $13.5 billion in the second round. The multiplier in the economy is:
A. 2 B. 3 C. 4 D. 5