Issuing marketable permits to firms that produce a product with external costs will give the firms the incentive to
A) declare bankruptcy.
B) buy and sell the permits amongst themselves.
C) escape the problem completely.
D) quit producing the output.
E) increase the external cost because they no longer need to deal with the externality.
B
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List and describe three different input markets
What will be an ideal response?
Oligopolies are difficult to analyze because
A) oligopolies are a recent development so economists have not had time to develop models. B) demand and cost curves do not exist for these types of industries. C) the firms are so large. D) how firms respond to a price change by a rival is uncertain.
Engel's law suggests that the demand for food is
a. income inelastic b. income elastic c. price inelastic d. price elastic e. highly correlated with population size
The price mechanism solves the "for whom" problem by assigning high prices to goods in high demand and letting customers choose whether to purchase them
a. True b. False Indicate whether the statement is true or false