Suppose that a government agency is trying to decide between two pollution reduction policy options. Under the permit option, 100 pollution permits would be sold, each allowing emission of one unit of pollution. Firms would be forced to shut down if they produced any units of pollution for which they did not hold a permit. Under the pollution tax option, firms would be taxed $250 for each unit of pollution emitted. The regulated firms all currently pollute and face varying costs of pollution reduction, though all face increasing marginal costs of pollution reduction. The two policies being considered will result in the same amount of pollution reduction:
A. always.
B. only if the equilibrium price in the pollution permit market is $250.
C. only if the equilibrium price in the pollution permit market is greater than $250.
D. never.
Answer: B
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Beginning in 1965, the head of the Antitrust Division of the U.S. Department of Justice began to change antitrust policy. How did antitrust policy change?
A) For the first time horizontal mergers were allowed—with government approval—and vertical mergers were allowed without need for approval from the government. B) For the first time concentration ratios were used to evaluate the degree of competition in the industries of firms that proposed mergers. C) Proposed mergers no longer needed the approval of the Federal Trade Commission or the court system. D) The Division began to systematically consider the economic consequences of proposed mergers.
In oral auctions, the price that the winner pays depends on
a. The winner's willingness to pay b. The highest willingness to pay among the losers c. The lowest willingness to pay among the losers d. None of the above
Which of the following refers to laws or policies that require employers to reach out to a broader range of minority job candidates?
a. Affirmative action b. Reverse discrimination c. Multiculturalism d. Diversity training
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the short run would be:
A. P3 and Y1. B. P2 and Y1. C. P2 and Y3. D. P1 and Y2.