Refer to the above figures. Externalities exist in both panels. After correcting for the externalities the prices should be
A) P1 and P3.
B) P1 and P4.
C) P2 and P4.
D) P2 and P3.
C
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The table above gives Jane's total utility from magazines and CDs. The price of a magazine is $4 and the price of a CD is $10. If Jane's total budget for magazines and CDs is $70.00 per week, what is her total utility at her utility maximizing consumer equilibrium?
A) 2480 units B) 1870 units C) 210 units D) 30 units
Which of the following is a possible government solution to the problem posed by a good with an external benefit?
A) Give a voucher to buyers of the good. B) Tax the consumption of the good. C) Tax the production of the good. D) All of the above are possible solutions.
How much do you believe that current tax policy is influenced by politics, as opposed to sound and efficient tax policy?
What will be an ideal response?
Use the security market line model to explain why stock prices did not rise when the Federal Reserve lowered the risk-free interest rate during the Great Recession of 2007–2009.
What will be an ideal response?