Suppose two power plants pollute a river and both firms operate under a system of marketable pollution permits. If it costs Firm A $90 to reduce pollution by 800 units per day, and Firm B can reduce costs by $115 by increasing pollution by 800 units per day:
A. the firms cannot gain by trading the right to pollute.
B. both firms can benefit if Firm A trades the right to increase pollution by 800 units to Firm B for $70.
C. both firms can benefit if Firm B trades the right to increase pollution by 800 units to Firm A for $120.
D. both firms can benefit if Firm A trades the right to increase pollution by 800 units to Firm B for $100.
Answer: D
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In recent decades, international trade has been
a. a constant percentage of U.S. GDP b. a declining fraction of U.S. GDP c. an increasing fraction of U.S. GDP d. declining as measured by total dollars spent e. constant as measured by total dollars spent
Taxes are the difference between
A. GDP and net exports. B. GDP and consumer spending. C. consumer spending and saving. D. GDP and disposable income.
Which of the following situations will arise in the domestic market following the imposition of an import ban?
A. imports increase, domestic production increases, prices increase B. imports increase, domestic production decreases, prices decrease C. imports decrease, domestic production increases, prices increase D. imports decrease, domestic production increases, prices decrease
Generally, expenses on a truck are a large part of a consumer's budget, so the demand for trucks is more likely to be
a. elastic b. inelastic c. unit elastic d. perfectly elastic