"Suppose the market for aluminum is perfectly competitive and unregulated. If aluminum factories emit pollution, the marginal social cost of aluminum is less than the market price". True or false? Explain
What will be an ideal response?
The statement is false. Pollution is an external cost, and marginal social cost equals marginal private cost plus marginal external cost. In an unregulated competitive market, the market price equals marginal private cost. As a result, the marginal social cost of aluminum is its market price, which equals its marginal cost, plus the marginal external cost of pollution. So the marginal social cost of aluminum is higher than the market price.
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Refer to above Table 2-1. What is the level of Personal Saving?
A) 100 B) 90 C) 80 D) 130
Suppose an investor equally allocates their wealth between a risk-free asset and a risky asset. If the MRS of the current allocation is less than the slope of the budget line, then the investor should:
A) shift more of their wealth to the risky asset. B) shift more of their wealth to the risk-free asset. C) keep the same asset allocation. D) We do not have enough information to answer this question.
If you enjoy playing golf, the opportunity cost of cleaning your room
a. is the same on sunny days as it is on rainy days b. is greater on sunny days than it is on rainy days c. is smaller on sunny days than it is on rainy days d. does not change with the weather conditions e. is equal to the opportunity cost of any other chore you have to do that day
Gooey Flakes is the only ready-to-eat cereal that has chocolate syrup injected into each flake. The machine that injects the syrup into the flakes can do nothing else. Which of the following is true?
a. All of the machine's earnings are economic rent. b. All of the machine's earnings are opportunity cost. c. The supply curve for this machine is horizontal. d. The demand curve for this machine is horizontal. e. The demand curve for this machine is vertical.