Three factories in Stinky City emit high quantities of sulfur dioxide into the local environment. The city government decides to set up a ____________________ that divides the allowable amount of this pollutant between the three companies. The companies can buy and sell these instruments, but the allowable amount of emissions goes down every year.
a. marketable permit program
b. pollution charge
c. pollution credit
d. fine system
a. marketable permit program
A marketable permit program allows a firm to emit a certain amount of pollution; firms with more permits than pollution can sell the remaining permits to other firms.
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Collusion results when a group of firms
i. act separately to limit output, lower prices, and decrease economic profits. ii. act together to limit output, raise prices, and increase economic profits. iii. in the United States legally fix prices. A) i only B) ii only C) iii only D) i and iii E) ii and iii
If the government's provision of a subsidy is too large to counteract the entire effect of a positive externality, the:
A. quantity consumed will become even lower. B. quantity consumed will become too high. C. total surplus will be maximized. D. None of these statements is true.
The PPF between goods X and Y will be a downward-sloping
A) straight line if increasing opportunity costs exist. B) straight line if decreasing opportunity costs exist. C) curve that is bowed inward if increasing opportunity costs exist. D) straight line if constant opportunity costs exist.
Whenever productive resources are used to make capital goods
A. society is giving up current consumption. B. the production possibilities curve becomes flatter. C. absolute advantage occurs. D. society is not producing efficiently.