Suppose people value clean air more as their incomes increase. What would happen to the optimal amount of clean air as a country develops economically? Is there an economic prediction we can make from this?
What will be an ideal response?
The optimal amount of clean air would increase because the marginal benefit curve of clean air would shift out as incomes rose. We would expect richer countries to spend more on air pollution clean up than poorer countries.
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A perfectly competitive firm should continue to operate even at a loss in the short run if
A. it can cover its variable costs of production. B. its revenues are less than its fixed costs. C. it has some fixed costs that cannot be brought down to zero. D. its output is above the break-even point.
Classical economists think general equilibrium is attained relatively quickly because
A) the real interest rate adjusts quickly. B) the level of output adjusts quickly. C) the real wage rate adjusts quickly. D) the price level adjusts quickly.
The fewer the firms that exist in a market, the: a. less responsive firms are to price changes
b. more responsive firms are to price changes. c. less responsive firms are to supply changes. d. less responsive firms are to demand changes.
If there is an increase in the demand for U.S. automobiles, the
A) demand for dollars will fall. B) demand for dollars will rise. C) supply of dollars will fall. D) supply of dollars will rise.