It has been proposed that a government agency be charged with the responsibility for determining the amount of pollution which the atmosphere or a body of water can safely recycle, and sell these limited rights to polluters. What would be the advantage of such a market for pollution rights?
What will be an ideal response?
The quality of water or air can be maintained at some acceptable standard through economic incentives
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Explain how a firm can have constant returns to scale in production and economies of scale in cost
What will be an ideal response?
Because there is no way to account for them, the official unemployment rate does not include discouraged workers. What would happen to the unemployment rate if, because of a program that gave them new hope, all discouraged workers suddenly begin reporting themselves as ready to work?
a. The official unemployment rate would remain unchanged. b. The size of the labor force would increase. c. The size of the labor force would remain unchanged. d. The official unemployment rate would decrease. e. The size of the underground economy would shrink.
If the typical firm in a perfectly competitive market is currently earning a 5% economic profit, what will happen in this market in the long run?
a. new firms will enter until the economic profits have disappeared. b. firms will exit until the economic profit reaches 10%. c. firms will neither enter nor exit, since 5% economic profit is enough to maintain the existing number of firms in the market. d. It depends on the rate of normal profit in this market.
At the equilibrium price of a good, the good will be purchased by those buyers who
a. value the good more than price. b. value the good less than price. c. have the money to buy the good. d. consider the good a necessity.