Refer to A Negative Externality Problem. Suppose there is no attempt to internalize the externality. Pigovian analysis indicates that the externality creates a deadweight loss equal to
Demand for a good is given by Q = 100 - P. The private marginal cost of production is MCP = 10 + Q. There is a $10 per unit negative production externality in this situation.
a. MCS = 10 + Q
b. MCS = Q
c. MCS = 20 + Q
d. MCS = 10 + 10Q
c. MCS = 20 + Q
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a) tell you the right course of action b) show you every possible consequences of your decision c) help you determine some of the opportunity costs for your decision d) show you every possible benefit of your decisions
If households expect an increase in their future incomes, they will save
A) less and consume more today. B) more and consume less today. C) and consume more today. D) and consume less today.
What is an average cost pricing rule? Why do regulatory agencies use it for natural monopolies?
What will be an ideal response?
After a price floor of $23 is placed on the market in the graph shown, which area represents consumer surplus?
A. A
B. A + B
C. A + B + C
D. A + B + C + D