The Yankee Candle Company, in Hatfield, Massachusetts, makes thousands of scented candles each day. The factory emits the odor of the candles it produces, some of which smell quite nice. On days when they make strawberry candles the townspeople really enjoy the smell. On days when they make potpourri scented candles, people close their windows and don't go outside. What can we infer about the
scented candle market?
a. b and c.
b. Strawberry candles are more expensive than is socially optimum.
c. Potpourri candles are priced too low to be socially optimum.
d. Candle production generates only negative externalities.
e. Candle production technologies are inefficient.
a
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If a price floor is set below the current market clearing price, then
A) a surplus must immediately occur. B) a shortage must immediately occur. C) there will be incentives for black markets to develop. D) quantity demanded will remain equal to quantity supplied at the current market clearing price.
If the average cost of a product is $10 per unit and the price is $5, the firm is losing money
a. True b. False Indicate whether the statement is true or false
Which of the following is exempt from taxation (a tax exemption)?
a. interest on a home mortgage b. interest from municipal bonds c. rent d. property taxes
A major problem with using a tradable emission allowances system to control pollution is
A) that it grants firms a license to pollute. B) the difficulty in determining the emissions target. C) it discourages firms from implementing cost-effective pollution control technology. D) that it does not eliminate pollution completely.