The Coase theorem states that when a market failure exists
A. government control of pollution is necessary.
B. homeowners and those affected by the pollution will control the level of pollution.
C. the outcome will be the same regardless of who owns the property right.
D. the polluter will control the level of pollution.
Answer: A. government control of pollution is necessary.
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Refer to the figure above. If the relative price of T were to increase, then the price line would
A) shift out in a parallel fashion. B) shift in a parallel fashion. C) become steeper. D) become flatter.
Which of the following would not shift the production possibilities frontier?
a. an increase in worker training b. a war that destroyed many buildings c. a technological improvement that improved fuel efficiency in cars d. a decrease in the size of the labor force e. a change to a more inefficient production process
Discretionary policy advocates believe: a. that there is a high cost associated with the use of a discretionary policy
b. that self-corrective forces in an economy work slowly. c. that natural adjustments of wages and prices can help attain potential output. d. in rational expectations. e. that an active stabilization policy imposes troubling fluctuations in the price level and real GDP.
About planning on capacity utilization: Producers typically
a. disregard interest rates when making long-term decisions about capacity utilization b. end up with high interest rates when planning for future capacity utilization c. operate at 100 percent capacity d. enjoy carrying excess productive capacity e. choose a capacity rate that gives them some degree of short-run flexibility