There are 100 residents in the City of Mos Eisley. Each resident's willingness to pay for an additional acre of parkland (P) depends on the number of acres the City already has (Q), and is given by P = 20 - 0.10Q. If parkland is a public good, and the cost of each acre of parkland is constant and equal to $500, then what's the socially optimal number of acres of parkland in Mos Eisley?
A. 0 acres
B. 185 acres
C. 150 acres
D. 520 acres
Answer: C
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The above figure shows a labor market with a minimum wage of $8 an hour. The deadweight loss equals the
A) area abc. B) distance ab. C) distance ad. D) area bad. E) area acd.
Leverage refers to
A) the ratio of total assets of a financial institution to total liabilities. B) the ratio of the liabilities of a financial institution to equity capital.. C) the ratio of equity capital of a financial institution to the liabilities. D) the ratio of the debt of a financial institution to liabilities.
Cartel agreements are difficult to sustain because:
A. it's usually easy to discover if one of the members has cheated. B. cartel members do not face the economic incentives inherent in a prisoner's dilemma. C. it's a dominant strategy for each cartel member to cheat on the cartel agreement. D. the collective payoff to all the cartel members is lower when they all abide by the cartel agreement.
Refer to the figure at right. Moving from point A to point B indicates