Government can deal with externalities through the use of taxes and subsidies.
Answer the following statement true (T) or false (F)
True
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Free riding often results than less than the optimal quantity of a good being produced
Indicate whether the statement is true or false
Which of the following is an example of an activity that creates a positive externality?
a. an iron smelting factory emits sulfur dioxide into the air b. the owner of a steamboat company dredges a river in order to improve navigation c. a group of investors starts a business specializing in transporting goods via clipper ship d. flatboat operators purchase steamboat tickets in order to return to their homes upstream
If all of the following examples are elastic, which one will most likely have an increase of revenue?
a. The price of shower curtains rises. b. The price of cell phones falls. c. The price of raspberries remains constant. d. The quantity supplied of skin moisturizer remains constant.
Use the following graph showing the domestic demand and supply curves for a specific product in a hypothetical nation called Marketopia to answer the next question.
When the world price for this product is $0.50, Marketopia will
A. import 500 units. B. export 100 units. C. import 400 units. D. import 100 units.