If a firm that emits a form of pollution is also a monopolist, is the firm more likely to be allocatively efficient when compared to a nonmonopoly polluter? Explain.
What will be an ideal response?
Yes. A monopolist maximizes profit by reducing output and raising price and produces too little output to be allocatively efficient. A polluting firm does not pay the full social cost of production and produces too much output. It is likely that the firm will be nearer to an allocatively efficient output volume.
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When speed boat sales rise, the city of Las Vegas takes in more revenue. The omitted common variable between these outcomes is likely to be:
A. life jacket sales. B. prices of Las Vegas flights. C. childhood obesity. D. increased disposable income.
Which of the following statements is true?
a. The speculative demand for money at possible interest rates gives the demand for money curve its upward slope. b. There is an inverse relationship between the quantity of money demanded and the interest rate. c. According to the quantity theory of money, any change in the money supply will have no effect on the price level. d. All of these.
Within the framework of the Keynesian model, if aggregate expenditures exceed aggregate output, then:
a. the inventories of firms would decline, and the firms would expand output in order to restore their inventories to desired levels. b. the inventories of firms would increase, and the firms would reduce output until inventories were cut back to the desired level. c. the current level of income would persist in the future. d. firms would reduce their investment, and the economy would fall into a recession.
Interest is the payment for the use of: a. borrowed funds
b. natural resources. c. labor. d. any factor of production.