Which of the following is an example of a negative externality?
A. A consumer pays a higher price than another consumer does for the same product.
B. There is an increase in injuries to pedestrians caused by accidents resulting from electronic billboards distracting drivers.
C. Consumers pay a sales tax in addition to the price of a product.
D. The opening of a new shopping mall increases the business of nearby restaurants.
Answer: B
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The mangers of Happy Campers and Camp with Us are engaged in a strategic interaction in which their interests are aligned, but there is more than one possible equilibrium. All of the following can help the managers determine the equilibrium outcome except which one?
A) an announcement made by either firm regarding their future plans B) the Pareto criterion C) a focal point D) unpredictable strategies
Consider the same monopoly situation as in the previous question. The deadweight loss (compared to a single firm behaving as if it were perfectly competitive) is about
a. 667 b. 333 c. 1,000 d. 1,333
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Suppose the government taxes 10 percent of the first $20,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $40,000 . Calculate the marginal tax rate and the average tax rate for a person who earns $100,000