The downside to targeting specific activities rather than the externality itself is:
A. any one activity is likely to not make a significant difference in the presence of an externality.
B. it risks misaligning the incentives that producers and consumers face with the goal of minimizing the externality.
C. it requires a number of different activities to be identified and several different policies to be written, which can be cumbersome and difficult to manage.
D. All of these statements are true.
Answer: B
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When deriving the production possibilities curve, it is assumed that
A) the amount of each good that is to be produced is fixed. B) the prices of resources are fixed along the curve. C) most resources can be used to produce only one good. D) resources are efficiently used.
Champlain College in Vermont runs a satellite campus in Dublin, Ireland. This is an example of:
A. foreign portfolio investment. B. exporting. C. importing. D. foreign direct investment.
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Table 5.4 presents the cost schedule for David's Figs. If David produces three figs, David's total variable costs are:
A. $0. B. $41.67. C. $80. D. $240.
Any rule that is used to make a choice is a
A) positive-sum game. B) zero-sum game. C) strategy. D) rational decision.