The insight that people can always arrive at efficient solutions to the problems caused by externalities if they can negotiate the purchase and sale of the right to perform activities that cause externalities is called the ________.
A. prisoner's dilemma
B. Sherman Act
C. Coase Theorem
D. tragedy of the commons
Answer: C
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Which of the following represents the correct formula for present value?
A) Present value = Payment T periods from now × (1 + interest rate)T B) Present value = Payment T periods from now - (1 + interest rate)T C) Present value = Payment T periods from now + (1 + interest rate)T D) Present value = Payment T periods from now / (1 + interest rate)T
The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. What is the area of deadweight loss when Light-U-Up is regulated and follows an average cost pricing rule?
A) acg B) degf C) deg D) There is no deadweight loss.
In the Classical model, a decrease in saving will result in saving being __________ than investment which will cause the interest rate to __________
A) greater; rise B) greater; fall C) less; rise D) less; fall
Refer to the above table. If opportunity costs are constant and both countries produce only the goods for which they have comparative advantages and then trade, hourly world output would equal
A) 4 units of product A and 4 units of product B. B) 8 units of product A and 4 units of product B. C) 8 units of product A and 8 units of product B. D) 12 units of product A and 8 units of product B.