Consider the production of some industrial good that involves air pollution. The table below gives the marginal social cost (MSC), the marginal cost (MC), and the marginal social benefit (MSB) for each level of output (Q)
Q MSC MC MSB
1 3 2 11
2 6 4 10
3 9 6 9
4 12 8 8
5 15 10 7
6 18 12 6
To arrive at the efficient market equilibrium the government could impose a tax of
A) $3.
B) $4.
C) $8.
D) $9.
A
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If a line passes through the points (20,5) and (10,10), then the slope of the line is 1/2
a. True b. False Indicate whether the statement is true or false
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pays Kachina $20 per hour. If Kachina can work additional hours at either job, what is the opportunity cost if she spends one hour reading a novel? a. $20 b. $25 c. $100 d. $125
The optimal quantity of a negative externality is zero if:
A. it is costly for people to negotiate with each other. B. it imposes a high enough cost on society. C. the marginal cost of reducing the externality is zero. D. the majority of voters decide to eliminate the externality.
The Fed's control over interest rates, quantitative easing, and direct lending to financial institutions are some of the tools of
A. fiscal policy. B. margin control. C. monetary policy. D. discount policy.