Refer to the information provided in Figure 16.4 below to answer the question(s) that follow.Los Angeles International Airport (LAX) is located next to Playa Del Rey. The noise from air traffic negatively affects individuals living in Playa Del Rey, however, this cost is not considered by airlines or air travelers. The airlines feel they have a right to use the airspace while the individuals living in Playa Del Rey feel they have the right to quiet. The following diagram depicts the marginal costs and marginal benefits associated with air travel.
Figure 16.4Refer to Figure 16.4. Suppose the government assigns property rights to ________. No negotiations
occur between the parties. The resulting level of air travel is 0 units.
A. the airlines
B. the residents of Playa Del Rey
C. both the airlines and the residents of Playa Del Rey in a 50-50 split
D. indeterminate from the given information.
Answer: B
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A firm should shut down in the short run if the price is less than the:
A) average fixed cost. B) average total cost. C) average variable cost. D) marginal cost.
Which of the following would be classified as fiscal policy?
A) The federal government cuts taxes to stimulate the economy. B) States increase taxes to fund education. C) A state government cuts taxes to help the economy of the state. D) The Federal Reserve cuts interest rates to stimulate the economy. E) The federal government passes tax cuts to encourage firms to reduce air pollution.
A firm is generally more interested in marginal profits than in total profits.
Answer the following statement true (T) or false (F)
Up until the early 1880s, there was no federal control over private activities
Indicate whether the statement is true or false