When a negative externality is present in a market, total surplus is:
A. higher when buyers only consider private costs.
B. lower when buyers only consider private costs.
C. lower when buyers consider social costs.
D. None of these statements is true.
B. lower when buyers only consider private costs.
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A ________ is a plan by one firm to price a good at marginal cost forever if the other cheats on an agreement
A) pure strategy B) grim strategy C) patent D) collusion
A company could produce 99 units of a good for $316 or produce 100 units of the same good for $320. The marginal cost of the 100th unit
A) is $3.20. B) is $4.00. C) is $320. D) cannot be calculated with this information.
Regulation of a natural monopoly that forces it to price and produce as if it were a competitive firm results in
A) the market being instantly competitive. B) higher profits for the monopoly. C) economic losses for the monopoly. D) a highly unstable marketplace.
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