Assume that production from an electric utility caused acid rain. If the government imposed a tax on the utility equal to the marginal external cost of the acid rain, the government's action would
A) externalize the externality.
B) result in a marginal social benefit greater than the marginal cost of the electricity.
C) be an example of supply-side economic policy.
D) internalize the externality.
Answer: D
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In the scenario above, the market is
A) a natural duopoly. B) a natural oligopoly with three firms. C) a natural monopoly. D) monopolistically competitive.
Suppose there's a 50% chance of a stock rising by 20% and a 50% chance of it falling by 20%. What is the expected rate of return on the stock?
A) -20% B) 0% C) 10% D) 20%
Holding supply constant, a reduction in demand leads to
A) lower prices and higher quantity supplied. B) lower prices and lower quantity supplied. C) higher prices and higher quantity supplied. D) higher prices and lower quantity supplied.
If large sectors of American industry are not very competitive, then the _______________ does not work as well as it could if American industry operated under a more perfectly competitive system.
Fill in the blank(s) with the appropriate word(s).