The social cost of cutting trees for firewood in a government forest is
A) the increased likelihood of flooding as more trees are cut.
B) the increased likelihood of flooding as more trees are cut plus the private cost of cutting the trees.
C) opportunity cost to the individual of cutting the wood.
D) the marginal costs of cutting the last tree.
Answer: B
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If velocity does not change and if real GDP and the quantity of money grow at the same rate, then the price level
A) does not change and the inflation rate is zero. B) falls and the inflation rate is negative. C) rises and the inflation rate is negative. D) falls and the inflation rate is positive. E) rises and the inflation rate is positive.
Based on Figure 6.1, given a tariff of $0.25 per bushel on soybean imports, how much will domestic production increase?
A) Domestic firms will increase output by 10 million bushels. B) Domestic firms will increase output by 20 million bushels. C) Domestic firms will increase output by 70 million bushels. D) Domestic firms' production will not be changed by the tariff.
The purchase of stocks and bonds is included in which component of GDP?
a. saving b. investment c. consumer spending d. They are not included in GDP.
Economists study the link between money and inflation because:
A. they want to understand how to keep inflation low and stable. B. the Fed needs to increase the money supply as prices increase. C. as prices increase money becomes more valuable. D. economists believe that inflation in the 3-6% range is healthy for an economy.