Refer to the information provided in Figure 16.4 below to answer the question(s) that follow.Los Angeles International Airport (LAX) is located next to Playa Del Rey. The noise from air traffic negatively affects individuals living in Playa Del Rey, however, this cost is not considered by airlines or air travelers. The airlines feel they have a right to use the airspace while the individuals living in Playa Del Rey feel they have the right to quiet. The following diagram depicts the marginal costs and marginal benefits associated with air travel.
Figure 16.4Refer to Figure 16.4. Suppose the government assigns property rights to the residents of Playa Del
Rey, then the airlines and the residents engage in negotiations. The ________ of air travel is 100 units.
A. minimum allowable level
B. government-regulated level
C. resulting efficient level
D. maximum allowable level
Answer: C
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If a decrease in the growth rate of AD leads to a decrease in real GDP in the short run: a. the decrease in AD could have been correctly anticipated
b. the decrease in AD could have been than anticipated c. the decrease in AD would have been completely unanticipated. d. the decrease in AD could have been any of the above.
When the curve that envelops the series of possible short-run average total cost curves is horizontal, this means that there are
a. economies of scale b. diseconomies of scale c. constant returns to scale d. diminishing returns e. some fixed factors of production
From 2004 to 2008, the federal budget deficit, on an official fiscal-year basis, was
A. large and growing larger. B. “negative,” that is, the budget was in surplus. C. declining. D. increased by the rising Social Security deficit.
The "depreciation rate" tells us
A) the interest rate that should be used in present discounted value calculations. B) the rate at which consumers deplete their total wealth in retirement. C) the difference between current and expected income. D) the difference between current and expected profits. E) how much usefulness a machine loses from year to year.