When there is no market for a negative externality, the producer of the externality _____
a. has strong incentive to consider the costs it imposes on others
b. will try to create a market
c. will limit production of the good producing the externality
d. has no incentive to consider the costs it imposes on others
d
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Some consumer electronics products such as plasma TVs, DVD players, and digital cameras, are introduced at very high prices but over time, their prices start falling (beyond what could be attributed to falling costs as companies take advantage of
economies of scale and cheaper technologies). Which of the following is the best explanation for this observation? A) Early adopters of these new products typically have a higher demand and higher income compared to those who are willing to wait. B) More firms are likely to enter the consumer electronics market over time, forcing market prices down. C) Early adopters are more quality conscious and are willing to pay higher prices for the initial production of these goods. D) After satisfying the demand for early adopters, firms lower price to attract the more price-sensitive consumers.
Suppose that in Mysore, the reserve—deposit ratio is
res = 0.5 - 2 i, where i is the nominal interest rate. The currency—deposit ratio is 0.2 and the monetary base equals 100. The real quantity of money demanded is given by the money demand function L(Y, i) = 0.5Y - 10i, where Y is real output. Currently, the real interest rate is 5% and the economy expects an inflation rate of 5%. The money multiplier equals A) 2.00. B) 2.40. C) 3.00. D) 4.00.
While the price of a resource may increase sharply during some periods, the structure of ____ accompanying the price increase makes depletion highly unlikely and provides the seeds for future reversal
a. government programs b. foreign competition c. incentives d. taxation
The business cycle is:
A. the term used to describe fluctuations in output around its long-term trend. B. the length of time required by a firm to buy inputs and produce and sell output. C. regular and predictable. D. the pattern of increases and decreases in the money supply.