The Rand Corporation estimates that external costs imposed by alcohol consumption (e.g., deaths caused by drunk drivers) to be 48 cents per ounce consumed. If taxes on alcohol are 23 cents per ounce consumed, then
A. marginal social benefit is greater than marginal social cost.
B. the alcohol taxes are increasing economic inefficiency and dead-weight loss.
C. alcohol consumption is greater than socially optimal.
D. marginal external costs plus marginal private costs are less than price.
Answer: C
You might also like to view...
Tastes for perfect substitutes are both homothetic and quasilinear.
Answer the following statement true (T) or false (F)
Refer to the scenario above. If both the firms are optimizing, which of the following statements is true?
A) Firm B will produce more than Firm A. B) Firm A will produce more than Firm B. C) Both firms will produce the same quantity. D) The quantity produced by both firms will depend on the demand for pens and not the marginal costs.
A possible market solution that a reputable firm can engage in when faced with the lemons problem is
A) to offer a warranty. B) to engage in externalities. C) to create asymmetric information. D) to use average cost pricing.
The relationship between the quantity of inputs and the quantity of outputs is called a:
A. production function. B. profit function. C. resource function. D. cost function.