A shift from S1 to S2 reflects the change that happens when a negative externality is taken into account. A shift from D1 to D2 reflects the change that happens when a positive externality is taken into account.Refer to the above figures. Which of the panels would be consistent with the situation in which external costs exist?
A. Panel 1
B. Panel 2
C. Panels 1 and 2
D. neither panel
Answer: A
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In the short run, a decrease in government expenditure ________ real GDP and ________ the price level
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
Oligopoly can arise from:
a. diseconomies of scale in production. b. limited demand for a product in the market. c. government regulations. d. easy availability of the crucial inputs. e. reduction of trade barriers.
To reduce cyclical unemployment the government might:
a) Increase the budget surplus b) Increase the balance of payments deficit c) Increase the budget deficit d) Reduce government expenditure
The horizontal intercept of the intertemporal budget constraint is referred to as
A. the future value of present income. B. the future value of lifetime income. C. the present value of lifetime income. D. the current value of future income.