Two farmers, A and B, each apply 100 tons of manure on their fields. To reduce manure runoff, the government has decided to require a permit for each ton of manure applied. The government gives each farmer 50 permits. Farmer A incurs losses of $25 for each ton of manure he does not apply, and Farmer B incurs losses of $50 for each ton of manure he does not apply. What is the total cost of
reducing runoff if firms are not allowed to buy and sell permits from each other? What is the total cost of reducing runoff if the firms are allowed to buy and sell permits from each other?
a. $3,750; $2,500
b. $2,500; $3,750
c. $5,000 . $2,500
d. $3,750; $3,750
a
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Refer to Figure 8A.1. Suppose that the economy starts with a capital stock of K0. Then total saving is given by point ________ and depreciation by point ________
A) c; d B) b; a C) d; c D) a; b
In the loanable funds market, what will change to eliminate a shortage of loanable funds and how is the shortage eliminated?
What will be an ideal response?
A requirement that buyers of one service also purchase another service from the same seller is called
a. exclusive dealing b. an interlocking merger c. a second good contract d. a tying contract e. a legal agreement
Financial markets are:
A. a powerful tool for the efficient allocation of scarce resources. B. in many ways the purest expression of the market mechanism. C. a global marketplace where sophisticated investors make billion-dollar decisions. D. All of these statements are true.