Economists view pollution as an economic problem that arises because
a. private enterprise always minimizes the amount of pollution produced
b. profitable firms rarely pollute
c. as the economy grows, the level of pollution declines
d. firms that pollute do not pay the full social cost of producing their output
e. pollution costs are borne by the consumer
D
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The fact that since 1990 the number of movie screens in the United States has grown faster than the number of theaters illustrates the benefits of
a. economies of scale b. constant long-run average cost c. diseconomies of scale d. increasing long-run average cost e. a U-shaped marginal cost curve
In a system of impersonal exchange,
a. bureaucratic ties on the production side are critical b. the economy benefits from specialization and modern technology c. inside connections on the consumption side are necessary d. successful institutional evolution makes no difference e. there is very little division of labor
An insured person's incentive to behave in ways that raise the probability of a claim is known as:
a. a moral hazard. b. the lemons problem. c. the problem of adverse selection. d. the problem of advantageous selection.
Consumers and firms are known as price takers only if
A) no market exists to determine the equilibrium price. B) they can set the market price. C) they cannot unilaterally affect the market price. D) excess demand exists.