In the presence of a negative externality, a specific tax can achieve the social optimum because
A) output is reduced to zero as a result.
B) it internalizes the external cost.
C) it directly charges the producer for polluting.
D) the price of the good rises by the full amount of the tax.
B
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When the investment is graphed as a function of real GDP
A) it graphs as a vertical straight line. B) it graphs as a 45-degree line starting at the indicated level of investment. C) it graphs as a negatively sloped line indicating the inverse relationship between interest rates and investment. D) it graphs as a horizontal straight line at the level of investment.
Table 30.1Number of workers (per hour)Total output (per hour)Marginal physical product (output per worker)Total revenue (dollars per hour)Marginal revenue product (dollars per hour worker)14---________---210________________________315________________________419________________________522________________________Assume that the product price is $4 per unit and that the hourly wage for workers is $12. Neither price nor wage changes with output. In Table 30.1, how many workers should be hired?
A. 3. B. 2. C. 4. D. 5.
Suppose the demand for hamburgers increases. In the short run, firms that produce hamburgers will experience a rise in prices, which will induce them to:
A. decrease production and decrease the number of workers. B. increase production and increase the number of workers. C. decrease production and increase the number of workers. D. increase production and decrease the number of workers.
In a bilateral monopoly, the wage rate that is determined in the market
A) is equal to MFC. B) is equal to MRP. C) is indeterminate. D) is the same as in a perfectly competitive market.