In the market for pollution permits, the total supply of permits is:
A. perfectly inelastic.
B. perfectly elastic.
C. determined by the Chicago Board of Trade.
D. always equal to the demand for permits.
Answer: A
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Which of the following applies to the tragedy of the commons? I. In the absence of government action, there is an absence of incentives to prevent the overuse of the common resource. II
When consumers take account of the marginal social benefit and marginal social cost, overuse of the resource occurs. III. Even with government action, it is impossible for an efficient level of output to be achieved. A) I only B) I and II C) II and III D) I, II and III
An external benefit is the benefit experienced by people who:
A. do not decide how much of the good to produce or consume. B. did not know why they are experiencing the benefit. C. decide how much of the good to produce or consume. D. consume the good.
Suppose a perfectly competitive firm and a monopolist are both charging $5 for their respective products. From this, one can infer that:
A. the competitive firm is charging too much, and the monopolist is charging too little. B. the marginal benefit from selling an additional unit of output is $5 for the competitive firm and less than $5 for the monopolist. C. the marginal benefit from selling an additional unit of output is $5 for both firms. D. the marginal benefit from selling an additional unit of output is less than $5 for both firms.
Refer to Table 11.1. What is the value of the government spending multiplier?
A) 1.67 B) 2.5 C) 3.33 D) 4