Which of the following examples involves externalities?
a. A garage sale results in an unreported profit of $500.
b. A drug cartel is broken up by the FBI.
c. A chemical factory causes extensive water pollution.
d. A vacation in Florida results in several people getting sunburn.
c. A chemical factory causes extensive water pollution.
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To what can we attribute the relatively high population growth in colonial America, compared with growth in England?
(a) The relatively advanced medicine in the colonies (b) Better climate, food and water (c) Better hygiene and preventive care (d) All of the above
An optimal corrective tax should be placed on _____
a. the sellers of the externality-generating activity b. the inputs into the externality-generating activity c. the externality-generating activity d. the purchasers of the output of the externality-generating activity
Assume the graph shown represents the market for button-up shirts and was originally in equilibrium with D and S. What type of shock might cause a shift from D to D2?
A. The price of ties went up. B. The price of buttons has increased. C. The price of sweatshirts went up. D. Income has increased.
A monopolistic competitor will maximize its profits at the output level at which
A. MR = ATC. B. the MC curve intersects the demand curve. C. MC = MR. D. ATC = price.