Refer to Table 2.1. You can spend $40 on going to the movies or eating at a restaurant, or both. What is the opportunity cost of spending all your money at the restaurant?
Table 2.1
Item A B C D E Movie $0 $10 $20 $30 $40 Restaurant $40 $30 $20 $10 $0
a. $0 b. $10 c. $20 d. $30 e. $40
e. $40
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Refer to Figure 5-2. The deadweight loss due to the externality is represented by the area
A) abc. B) abd. C) abf. D) ade.
What is the AA-curve? Why does it have a negative slope? What factors cause it to shift?
What will be an ideal response?
An individual firm has little incentive to voluntarily internalize any external costs it was creating because: a. it would shift its cost curves downward
b. it would put it at a competitive disadvantage compared to its rivals. c. it would have to increase output to make up for the added costs. d. they do not care at all about other people.
If the national debt is strictly an internal debt, then
a. the amount of the debt places a burden on the generation that repays the debt b. the amount of taxes used to pay the interest on the debt equals the interest payments to the bond holders, and there is no national debt burden c. the amount of taxes used to pay the interest on the debt equals the interest payments to the bond holders creating a national interest-created debt burden d. the amount of the debt places a burden on the generation when the debt is incurred because it reduces the amount of consumption e. the amount of taxes used to pay the debt is paid by future generations, which shifts the burden of the debt from the present to the future generation