Since trash generation involves an externality, the way economists might address the problem of trash generation that is most likely to be optimal is by:
A. not allowing persons to throw away more trash than is acceptable as a maximum.
B. having the government require mandatory sorting and recycling of trash.
C. integrating the cost of the externality into the initial price of the good.
D. having the cost of the externality be paid by the government.
Answer: C
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The price elasticity of demand for eggs is 0.27. Thus, 0.27 is the:
A. percentage change in the quantity demanded of eggs when the price of eggs increases by one percent. B. size of the shift in the demand for eggs when the price of eggs changes by one percent. C. size of the percentage change in the quantity supplied of eggs when the demand for eggs changes due to a price change. D. percentage change in the price of eggs when the quantity demanded of eggs increases by one percent.
Without government intervention, society is likely to get too much production of: i. private goods that generate external costs ii. private goods that generate external benefits iii. public goods
a. (i) only b. (ii) only c. (iii) only d. both (ii) and (iii)
The distinguishing characteristic of private goods is that
A) the principle of rival consumption does not apply to them. B) their use is exclusive to the people who purchase them. C) they can be sold but not rented. D) they can be sold or rented, but not borrowed.
The money demand curve has a negative slope because
A) lower interest rates cause households and firms to switch from financial assets to money. B) lower interest rates cause households and firms to switch from money to financial assets. C) lower interest rates cause households and firms to switch from money to bonds. D) lower interest rates cause households and firms to switch from money to stocks.