A price floor policy establishes a minimum price for a market. Which of the following results from a binding price floor?
A. Shortage
B. Excess demand
C. Excess supply
D. Equilibrium
C. Excess supply
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According to the Coase theorem, under certain conditions the market can internalize externalities.
Answer the following statement true (T) or false (F)
When a citizens' group opposes expansion of the prison located in town, the basis of the opposition is that the larger prison will produce
a. a negative externality for the community b. a positive externality for the community c. more jobs in the community d. tax revenue for the community e. improved criminal justice options
Suppose that cigarette smokers create a negative externality. Further suppose that the government imposes a tax on cigarettes equal to the per-unit externality. What is the relationship between the after-tax equilibrium quantity and the socially optimal quantity of cigarettes?
a. They are equal. b. The after-tax equilibrium quantity is greater than the socially optimal quantity. c. The after-tax equilibrium quantity is less than the socially optimal quantity. d. There is not enough information to answer the question.
You make a $1,000 investment in the stock of ABC Inc. Over the next year the investment decreases by 60%. What percentage increase do you need in the following year on your holding to be back to $1,000?
What will be an ideal response?