Figure 16.4The pollution tax in Figure 16.4:
A. increases equilibrium output.
B. decreases equilibrium price.
C. gives the firm an incentive to switch to a cleaner production process.
D. All of these
Answer: C
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Using the figure above, suppose a subsidy of $15,000 per student is provided to private colleges. Then, the market equilibrium occurs at a tuition of ________ a year and ________ million students
A) $10,000; 15 B) $25,000; 15 C) $15,000; 15 D) $15,000; 7.5 E) $20,000; 20
Maggie is trying to convince her friend Hannah to spend the morning at the beach instead of studying economics. Maggie’s argument is that the beach is free so will not cost Hannah anything to go. Maggie even volunteers to drive. Maggie’s argument
a. is correct; it is free to go to the beach. b. is forgetting Hannah’s opportunity cost of not being able to study. c. assumes Hannah has to eat at home or the beach so it will not cost Hannah additional money. d. is forgetting sunk costs.
What are the two approaches followed by the U.S. government to ease the burden on the victims of free trade?
What will be an ideal response?
A perfectly competitive firm will maximize its profit at the level of output where the vertical distance between its total revenue curve and total cost curve is the largest. This is the same level of output where
A) average total cost equals marginal revenue. B) marginal revenue equals marginal profit. C) marginal revenue equals marginal cost. D) marginal revenue equals average revenue.