When negative externalities exist in a market, if the producers are forced to pay a Pigouvian tax then:
A. those who interact in the market will gain surplus.
B. producers will gain surplus.
C. those who do not interact in the market but are affected by the externality will lose surplus.
D. those who interact in the market will lose surplus.
Answer: D
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Suppose your bank account pays a 4% interest rate. You are considering purchasing a share of stock in ABC Corporation for $500 . The stock will pay you a $10 dividend at the end of years 1, 2, and 3 . You expect to be able to sell the stock at the end of year 3 for $550 . Is ABC a good investment? Provide evidence to support your answer
Externalities can be positive, as well as negative.
A. True B. False C. Uncertain
How does oligopoly differ from monopolistic competition?
What will be an ideal response?
According to the traditional economic model, which of the following would alter a state of consumer equilibrium if all other factors remain the same?
a. a decrease in the price of a good b. an increase in the quantity supplied of a good c. a decrease in the number of substitutes d. an increase in the number of complements