If markets are perfectly competitive and production of a good results in water pollution, the imposition of a tax on that good will:
A. reduce the price of that good and increase pollution.
B. reduce both the price of that good and pollution.
C. increase the price of that good and reduce pollution.
D. increase both the price of that good and pollution.
Answer: C
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When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. The price elasticity of demand for this product is
A. perfectly elastic. B. elastic. C. inelastic. D. unit elastic.
If interest rates fall due to a monetary expansion, normally this would:
(a) Lead to lower economic growth. (b) Lead to higher economic growth. (c) Lead to deflation. (d) None of the above.
The __________________ traces the flow of money, resources, and goods and services through the economy.
Fill in the blank(s) with the appropriate word(s).
There is a futures contract for the purchase of 100 bushels of wheat at $2.50 per bushel. At the end of the day when the market price of wheat increases to $3.00 per bushel:
A. the seller (short position) needs to transfer $50 to the buyer (long position). B. the buyer (long position) needs to transfer $50 to the seller (short position). C. nothing happens since with a futures contract all payments are made at the settlement date. D. nothing happens since marked to market adjustments only take place when the market price falls below the contract price.