A year-long drought that destroys most of the summer's crops would be considered a:
A. short-run supply shock.
B. long-run demand shock.
C. long-run supply shock.
D. short-run demand shock.
Answer: A
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Which is NOT an advantage of emissions fees over standards?
A) Fees can give a firm the incentive to reduce emissions below the standard when new technology allows. B) Fees can reduce the cost of attaining some goal level of emissions when firms all have the same abatement costs. C) Fees can reduce the cost of attaining some goal level of emissions when firms have different abatement costs and different standards can be assigned to different firms. D) Fees can reduce the cost of attaining some goal level of emissions when firms have different abatement costs and different standards cannot be assigned to different firms. E) Fees may provide an incentive for a firm to investigate emissions-reduction technology that will reduce emissions below existing standards.
A cafeteria is willing to produce 100 bottles of soda when the price is $1 and 150 bottles of soda when the price is $1.30, other things being equal. The price elasticity of supply of soda is
A. 0.10. B. 0.67. C. 1.53. D. 0.50.
If Microsoft is earning a rate of return greater than the return necessary for the business to continue operations in the long run, then
A. the normal rate of return is zero. B. total costs exceed total revenue. C. total costs exceed a normal rate of return. D. the firm is earning an economic profit.
Which of the following is likely to arise in a market with asymmetric information?
A) Moral hazard B) A pecuniary externality C) A positive externality D) A prisoners' dilemma