Non-smokers being exposed to smoke from smoking by others (i.e., second-hand smoke) is an example of
A. a situation where social marginal benefit exceeds social marginal cost.
B. moral hazard.
C. transboundary pollution.
D. a negative externality.
Answer: D
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Often politicians assert that a price, such as the price of gasoline or the rent for an apartment, is too high and that it is unfair for these prices to be so high
If these products are traded in competitive markets, what fairness rule are politicians using? Why?
Markets help to promote growth by:
A. encouraging self-sufficiency. B. undermining a nation's comparative advantage. C. reducing specialization and the division of labor. D. increasing specialization and the division of labor.
A nondiscriminating pure monopolist's demand curve:
A. lies above its marginal revenue curve. B. coincides with its marginal revenue curve. C. lies below its marginal revenue curve. D. is perfectly inelastic.
The inefficiency of taxation means that imposing a tax on a good or service typically
A. increases costs across the board. B. reduces the amount produced. C. increases the amount produced. D. causes backlogs and surpluses.