When using pollution charges to improve efficiency in a market with an external cost, regulators attempt to set the pollution charge equal to the
A) marginal social cost of production.
B) marginal external cost of production.
C) marginal private cost of production.
D) marginal private benefit of consumption.
E) marginal external benefit minus the marginal external cost.
B
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The least costly way to produce a given level of output is indicated by the point of tangency between a budget line and the production indifference curve corresponding to that level of output.
Answer the following statement true (T) or false (F)
For collusion to make sense, the payoff matrix must be a
a. positive-sum game. b. zero-sum game. c. negative-sum game. d. negative-positive-sum game.
Economic models like the AD-AS model tell us:
A. how to determine which economic variables are changing. B. what to expect if we know what is happening. C. exactly what is happening. D. nothing useful about the real world.
The government imposes a unit excise tax on bubble gum. What happens as a result?
A. There will be no change in either the market price or equilibrium quantity as long as the excise tax rate is 5 percent or less. B. At the original market price, there is a bubble gum shortage and so price rises. C. The equilibrium quantity of bubble gum increases. D. At the original market price, there will be a bubble gum surplus so price decreases.