Why would a firm continue to pollute even when it is fined (taxed) for doing so?
What will be an ideal response?
A firm may find it more profitable to pay the tax and continue polluting if its revenues from selling its product are sufficient to cover the cost of the resources used and to compensate the damaged parties fully.
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Explain how a specific tax equal to the marginal harm of pollution can increase or decrease total welfare in a monopoly market
What will be an ideal response?
Imperfect information means which of the following?
a. one party to the transaction has more information than the other party b. buyers and sellers have all the information necessary to make an informed decision c. buyers and sellers do not have all the information necessary to make an informed decision d. buyers always have more information than sellers to make an informed decision
To increase the money supply, the Fed purchases government securities from banks, paying for them with new reserves
a. True b. False Indicate whether the statement is true or false
Which of the following will most directly determine the market price of a business or physical asset?
a. cost of the asset b. expected future net earnings derived from the asset c. book value (original purchase price minus depreciation) of the asset d. age of the asset