The Environment Ministry in Japan proposed a new carbon tax to meet Japan's obligations to reduce carbon dioxide emissions under the Kyoto Treaty. The tax would be levied on producers and importers of fossil fuels, and the expectation is that it would be largely passed on to consumers. The rationale for this tax is that it will:
A. reduce a negative externality.
B. turn a private good into a public good.
C. turn a public good into a private good.
D. reduce a positive externality.
Answer: A
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If workers must put up a $1,000 bond and the gain to each worker from shirking is $100, what is the employer's optimal level of monitoring that is just sufficient to discourage shirking?
The marginal resource cost of a resource is the additional cost of employing one additional unit of the resource
a. True b. False
A price-discriminating firm will always maximize profit by following the condition that
A. MR > MC. B. MR > P. C. MRa = MRb = MC. D. MR = ATC.
If you know that total fixed cost is $200, total variable cost is $600, and total product is 4 units, then average total cost must be:
A. $200 B. $250 C. $800 D. $3200