If a pollution tax imposed on a firm is smaller than the external cost:
A. the externality is completely internalized.
B. the social production cost increases by the amount of the pollution tax.
C. the pollution tax transfers the full cost borne by people outside the firm back to the firm itself.
D. from society's viewpoint, the firm is producing too much.
Answer: D
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The above figure shows Bob's utility function, which is
A) concave. B) convex. C) linear. D) L-shaped.
The slope of the total production curve becomes:
A. steeper when marginal product increases, typically at low levels of input. B. flatter when marginal product increases, typically at high levels of input. C. steeper when marginal product decreases, typically at high levels of input. D. flatter when marginal product decreases, typically at low levels of input.
On the surface, Usury laws are designed to protect consumers from exorbitant interest rates.
Answer the following statement true (T) or false (F)
Proponents of fixed exchange rates argue that the predictability of the fixed exchange rate:
A. decreases trade and economic integration. B. prevents exchange rate overvaluation. C. increases trade and economic integration. D. allows monetary policy to be used to stabilize the domestic economy.