A steelmaking plant pollutes the air and water so __________
A. the marginal social cost of producing steel exceeds the marginal private cost by the amount of the marginal external cost
B. the marginal social cost of producing steel is less than the marginal private cost by the amount of the marginal external cost
C. the marginal private cost of producing steel equals the marginal ex-ternal cost plus the marginal social cost
D. the marginal private cost of producing steel minus the marginal social cost equals the marginal external cost
A MSC = MC + marginal external cost, so MSC ? MC = marginal external cost.
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Suppose the cost curves in the above figure apply to all firms in the market. If the initial price is P1, firms are ________ and some firms will ________ the industry
A) making an economic profit; leave B) making an economic profit; enter C) incurring an economic loss; leave D) incurring an economic loss; enter
Governments regulate natural monopoly by capping the price at _____
A. marginal revenue and allowing the monopoly to maximize profit B. marginal cost so that the monopoly is efficient and makes zero eco-nomic profit C. average total cost, which allows the monopoly to be inefficient but make zero economic profit D. the buyers' willingness to pay, which makes the monopoly operate efficiently
Suppose that a small economy that produces mostly agricultural goods experiences a year with exceptionally good conditions for growing crops. The good weather would
a. shift both the short-run aggregate supply and the short-run Phillips curve right. b. shift both the short-run aggregate supply and the short-run Phillips curve left. c. shift the short-run aggregate supply curve to the right, and the short-run Phillips curve to the left. d. shift the short-run aggregate supply curve to the left, and the short-run Phillips curve to the right.
Two identical firms compete as a Cournot duopoly. The demand they face is P = 100 ? 2Q. The cost function for each firm is C(Q) = 4Q. In equilibrium, the deadweight loss is:
A. $512. B. $384. C. $256. D. $128.