The above figure shows the marginal benefit to a firm of polluting in the local river while producing its output, and the marginal cost to the firm's neighbor. The marginal cost of production is zero for the firm
If there is just one neighbor who owns the river, how much pollution is likely to occur? A) 0 units
B) 500 units
C) 1000 units
D) more than 1000 units.
B
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What is not true for a system of financial penalties for polluters?
A. Firms may be fined for pollution. B. Firms might have to pay a tax for each unit of pollution created. C. Firms would be encouraged to pollute less. D. Firms are always guaranteed the permit to pollute.
Double markup problems arise when
a. upstream firms have no market power b. downstream firms have no market power c. upstream and downstream products are unrelated in demand d. upstream and downstream firm's pricing decisions tend to decrease the demand for the other product
Which of the following statements about fiscal policy is correct?
a. Fiscal policy can help an economy that is producing below its potential GDP to expand aggregate demand so that it produces closer to potential GDP, thus lowering unemployment. b. Fiscal policy cannot help an economy produce at an output level above potential GDP without causing deflation. c. Fiscal policy cannot help an economy that is producing below its potential GDP to expand aggregate demand so that it produces closer to potential GDP, thus lowering unemployment. d. Fiscal policy can help an economy produce at an output level above potential GDP without causing inflation.
In 2003, ratings agencies downgraded bonds issued by the State of California several times. How will this affect the market for these bonds?
A. The yield on these bonds will not change, nor will the yield on Treasury bonds. B. The yield on these bonds and on Treasury bonds will both decrease. C. Yields on these bonds will decrease and the yield on Treasury bonds will increase. D. Yields on these bonds will increase.