A market for pollution permits can efficiently allocate the right to pollute by using the forces of supply and demand
a. True
b. False
Indicate whether the statement is true or false
True
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Because producers do not bear the external cost of pollution,
A) private production exceeds the economically efficient level. B) the economically efficient level of production is achieved. C) private production is below the economically efficient level. D) the market price for the product being produced by the pollution-generating company is too high.
Several firms want to be the only horse carriage service in a small tourist town and must pay the city for a license to operate as a monopoly. Competition among the potential firms will result in
A) bidding up the price of the license so that the winning firm makes $0 economic profit. B) the winning firm making an economic profit because it will be a price maker. C) the winning firm making an economic profit because it will have no competition. D) the winning firm making an economic profit because rent seeking cannot occur. E) a $0 economic profit because monopolies are illegal.
Suppose the money market has an equilibrium interest rate of 10 percent. If the actual interest is 8 percent, which of the following occurs to bring the money market back to equilibrium?
A) People buy bonds, the price of bonds rises and the interest rate rises. B) People buy bonds, the price of bonds falls and the interest rate rises. C) People sell bonds, the price of bonds rises and the interest rate rises. D) People sell bonds, the price of bonds falls and the interest rate rises.
Which of the following is true of exports and imports? a. Both imports and exports are added to a nation's gross domestic product (GDP)
b. Both imports and exports are subtracted from a nation's gross domestic product (GDP). c. Imports are added and exports are subtracted from a nation's gross domestic product (GDP). d. Exports are added and imports are subtracted from a nation's gross domestic product (GDP). e. Neither imports nor exports are included in a nation's gross domestic product (GDP).