Pollution is caused by a market failure, in an industry in which there is
A. excess demand.
B. an over-allocation of resources in production.
C. excessive cost borne by the firm.
D. unemployment.
Answer: B
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If inventory levels are decreasing, then we should expect business firms to
A. decrease prices. B. decrease output. C. lay off workers. D. increase output.
The Big Mac Index uses the price of a Big Mac in local currencies around the world as a way of testing the purchasing power parity theory. Which of the following is a partial explanation for why the PPP theory does not apply to the Big Mac Index?
a. Wages do not differ across countries b. Trade barriers, such as tariffs and quotas on beef, may distort local prices c. Taxes do not distort local prices d. Rent does not vary substantially across countries e. The Big Mac is traded internationally
If a minimum wage law is passed imposing a price floor above the equilibrium price of unskilled labor:
a. the quantity of unskilled labor demanded will exceed the quantity of unskilled labor supplied. b. the quantity of unskilled labor supplied will equal the quantity of unskilled labor demanded. c. the quantity of unskilled labor supplied will exceed the quantity of unskilled labor demanded. d. the demand for unskilled labor will decrease.
If there are short-run profits in a perfectly competitive industry, in the long run new firms will ____________ and the industry-wide price will __________.
Fill in the blank(s) with the appropriate word(s).