In order for pollution taxes to be effective in eliminating the deadweight loss resulting from pollution, the pollution tax must be set equal to the
A) marginal private cost.
B) marginal external cost.
C) marginal social cost.
D) marginal benefit of polluting.
E) price of the good.
B
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The union representing the bread makers at the Hostess Bread Company went on strike and demanded higher wages than what the firm wanted to pay
I. If the firm is in a competitive labor market the union can only raise wages by decreasing employment. II. If the firm is a monopsony in the labor market the union can only raise wages by decreasing employment. III. If the firm is a monopsony in the labor market the union can both raise wages and increase employment. A) I only B) II only C) I and II D) I and III
When the quantity of a good bought and sold is below the market equilibrium quantity, the loss of total surplus that results is called:
A. deadweight loss. B. producer surplus. C. consumer surplus. D. total surplus.
According to the modern view of the Phillips curve, expansionary macroeconomic policy that leads to inflation will reduce unemployment
a. only if people underestimate the inflationary side effects of the policy. b. only if people overestimate the inflationary side effects of the policy. c. if people accurately anticipate the inflationary side effects of the policy. d. only if monetary policy provides the macroeconomic stimulus.
Briefly evaluate the advantages and disadvantages of a lump-sum tax