A plastics factory emits water pollutants into a nearby river
The marginal private cost of producing plastics is constant, the marginal external cost of the pollutants increases with the quantity of plasticis, and the demand for plastics is downward sloping. What happens to the socially optimal level of output and market price if the marginal external cost curve shifts upward? A) Optimal price and quantity decrease
B) Optimal price increases, optimal quantity remains unchanged
C) Optimal price increases, optimal quantity decreases
D) Optimal price and quantity decline
C
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Based on risk-return tradeoffs observable in the financial marketplace, which of the following securities would you expect to offer higher expected returns than corporate bonds?
a. U.S. Government bonds b. municipal bonds c. common stock d. commercial paper e. none of the above
If an excise tax is imposed on steak,
a. the government's tax revenue will decrease b. the government's tax revenue will increase c. the amount of steak produced and sold will increase d. the market price of steak will decrease e. the market price will rise but the market quantity will be unaffected
The value of the estimated transformation parameter in generalized least square estimation that eliminates serial correlation in error terms indicates whether the estimates are likely to be closer to the pooled OLS or the fixed effects estimates.
Answer the following statement true (T) or false (F)
Suppose that Japan and India are both engaged in the production of radios and rice, and that Japan has an absolute advantage in the production of both goods. If India has a lower opportunity cost for producing rice, then
A. India has a comparative advantage in the production of rice, but it is outweighed by Japan's absolute advantage in rice production. B. India has a comparative advantage in rice production, but there will be no gains from specialization and trade. C. Japan has a comparative advantage in the production of both goods. D. India has a comparative advantage in the production of rice, and specialization and trade between the two countries can be mutually beneficial.