One difficulty in using voluntary transactions to internalize externalities is that
A) people are motivated by self-interest and are often unwilling to engage in a transaction that might make another person better off.
B) the government usually will not enforce contracts of this type.
C) transaction costs of coming to an agreement can be very large when numerous people are involved.
D) people usually don't understand what the real opportunity costs are that they face.
Answer: C
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A perfect monopoly:
A. has no competition at all. B. has complete market control. C. restricts output to maximize profits. D. All of these statements are true.
The price-taker firm should discontinue production immediately if:
a. the market price exceeds the firm's average total costs. b. the market price is less than the firm's average variable costs. c. the market price is less than the firm's average total costs, but greater than its average variable cost. d. its accounting statement indicates that it is suffering losses.
An increase in the price level will _____
Fill in the blank(s) with the appropriate word(s).
Suppose Heidi's Ice Cream experiences economies of scale up to a certain point and diseconomies of scale beyond that point. Its long-run average cost curve is most likely to be
A. U-shaped. B. downward sloping to the right. C. upward sloping to the right. D. horizontal.