Refer to the above supply and demand graph. In the graph, point A is the current equilibrium level of output of this product and point B is the optimal level of output from society's perspective. S is the supply curve without a tax and St is the supply curve with a tax. If government corrects this externality problem with a tax so that all the costs are included in the cost of production, then the product price will be set at point:
A. E.
B. D.
C. F.
D. G.
Answer: D
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Socialism is correctly described by which of the following statements?
a. Central planning is used exclusively to answer the basic economic questions. b. Markets are used exclusively to answer the basic economic questions. c. Tradition is used exclusively to answer the basic economic questions. d. Government ownership of many resources and centralized decision-making answers the basic economic questions.
The proportion of domestic demand for a good that is satisfied by domestic production relative to that supplied by imports is determined by:
a. the interplay of domestic demand and supply curves and the domestic equilibrium price of the good. b. the interplay of demand and supply curves in the international market and the international equilibrium price of a good. c. domestic supply and demand curves and the international equilibrium price of a good. d. the different trade restrictions like tariffs and quotas created by the domestic government. e. the interplay of demand and supply curves in the international market and the domestic price of the good
HydroGrow is considering building a new greenhouse in which to grow tomatoes. The board meets and decides that this is the right thing to do. Before they can put their plans into action, the interest rate increases. The present value of the returns from this investment project
a. is now lower than it was before, and so Hydro Grow is less likely to build the building. b. is now lower than it was before, and so HydroGrow is more likely to build the building. c. is now higher than it was before, and so HydroGrow is less likely to build the building. d. is now higher than it was before, and so HydroGrow is more likely to build the building.
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In Exhibit 3-11, in Panel A the movement from point A to point C describes a(n):
A. ambiguous change in price and a decrease in quantity. B. increase in price and an ambiguous change in quantity. C. increase in both price and quantity. D. decrease in both price and quantity.