Full marginal-cost pricing of water would lead to
a. More water use and higher water prices
b. Less water use but no change in water prices
c. Less water use and higher water prices
d. Less water use and lower water prices
e. More water use and lower water prices
Answer: c. Less water use and higher water prices
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Lolita wants to purchase a beautiful art deco office building built in the 1920s, tear it down, and construct a rather bland, glass-and-steel office building that will confer $2 million of benefits to society. In its current state, the art deco office building is worth $1.7 million. Lolita goes to the city council with her proposal and tells the council members that the new office building will hold more tenants and therefore increase employment and tax revenues. If the city council agrees to use eminent domain to allow Lolita to proceed with her project, society as a whole will
A) be made poorer since eminent domain is a costly process. B) be made poorer since the area will be less aesthetically beautiful. C) be made richer since the project confers benefits that are greater than the current value of the art deco office building. D) not be affected since the project only encompasses one small parcel of land.
Explain how continuing technical progress may cause the price of scarce, exhaustible resources to fall over time
What will be an ideal response?
Which of the following statements is correct?
a. In an economy-wide sense, property rights are an important prerequisite for the price system to work. b. Property rights give people the ability to exercise authority over the resources they own. c. Based on the available evidence, the existence of well-established and well-enforced property rights appears to be associated with an enhanced standard of living. d. All of the above are correct.
In the wake of the 2008 recession, the electronics retailer Circuit City closed its stores. If we assume this was a short-run decision, the most likely explanation for it is that the price of a typical product sold at Circuit City stores was:
A. less than the average variable cost of producing the toy. B. less than the average total cost of producing the toy but greater than the average variable cost. C. greater than the average total cost of producing the toy. D. equal to the average total cost of producing the toy.