Which of the following criteria should be used to evaluate if government intervention in a market for the purpose of environmental protection is justified?
A) Does the intervention program reduce pollution to zero using the least costly method?
B) Is the intervention program economically efficient?
C) Does the intervention program make the amount of economic surplus as large as possible?
D) Is the damage to the environment from government intervention as small as possible?
Answer: B
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How is offshoring of services different from past trade patterns?
What will be an ideal response?
A policy that directly targets the externality:
A. encourages innovation, which matches the goal to stop production of the externality. B. gives firms incentives to find different ways to do things, rather than pay for the right to create the externality. C. Both of the above statements is true. D. None of these statements are true.
Isabella decides to buy a dress that Olivia has for sale; they agree on a price of $20 . Which of the following best describes who gains and who loses from the transaction?
a. If the dress originally costs more than $20, Isabella gains and Olivia loses. b. If the dress originally costs less than $20, Olivia gains and Isabella loses. c. Both parties expect to gain from this transaction. d. If Olivia gains from the transaction, Isabella must lose an equal amount.
Refer to Figure 21.3. The best estimate of where diminishing marginal returns begin is at an output level of
A. 10. B. 40. C. 20. D. 30.