Electricity has a negative production externality because _____
A. its marginal benefit decreases as more of it is consumed
B. the marginal private cost of producing it increases as more of it is produced
C. the marginal social cost of producing it exceeds the marginal private cost of producing it
D. a marginal external cost lowers the marginal benefit from consuming it
C MSC = MC + marginal external cost, so with an external cost present, MSC > MC.
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A new major league baseball expansion team is moving to your town. It will inject spending worth $40 million into your local economy initially. The Chamber of Commerce predicts that this will generate a total of $500 million in additional income for your town. The team owners think that this is an underestimate. What do you need to know to figure out who is right? Explain
Inferior goods have negative income elasticities
a. True b. False Indicate whether the statement is true or false
Suppose labor demand can be described as ED = 120,000 ? 1.5w where w is yearly salary. How many more workers are demanded at a going wage of $60,000?
A. 50,000 B. 30,000 C. 20,000 D. 60,000 E. 40,000
You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 20 ? Q, where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 2 and MC2 = 2Q2. How much output should be produced in plant 1 in order to maximize profits?
A. 4 B. 11 C. 8 D. 1