Pollution occurs when lumber is produced. If the lumber market is unregulated, there would be
A) overproduction of lumber compared to the efficient amount.
B) underproduction of lumber compared to the efficient amount.
C) sometimes overproduction and sometimes underproduction of lumber compared to the efficient amount.
D) an external benefit to producing lumber.
A
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An extreme case where either the quantity demanded (Qd) or supplied (Qs) changes by an infinite amount in response to any change in price is called:
a. perfect elasticity. b. imperfect elasticity. c. strong elasticity. d. weak elasticity.
Why is fiscal policy less effective in an open economy than in a closed economy?
a. Expansionary fiscal policy raises demand for imports, which reduces aggregate demand.
b. Expansionary fiscal policy raises interest rates, which raises the value of the currency, and reduces aggregate demand.
c. Expansionary fiscal policy raises the value of the currency, which reduces demand for exports.
d. Expansionary fiscal policy has all the above effects.
The total revenue effect of a movement along a demand curve can best be predicted using the
A. Law of demand. B. Utility-maximizing rule. C. Law of diminishing marginal utility. D. Price elasticity of demand.
The infant industry argument is valid when
A. a new industry is suffering financial losses. B. a new industry is less efficient than foreign competitors. C. the industry’s prospective gains are sufficient to repay the social losses incurred while it is being protected. D. the industry is not likely to be profitable in the future.