Pleasure boaters enjoy the use of waterways, but sometimes run into problems and need rescue. Coast Guard boats, supported by tax revenue, are often used for rescue. Is it likely that there will be an efficient amount of boating and rescuing?
What will be an ideal response?
No. The full cost of boating includes the cost of rescue, based on the amount of rescue that a typical boat ride requires. Rescue is supported by general tax revenue, not a charge on boats or other charges directly paid by the boaters. The social cost of the boat trips is below the private cost, resulting in too many boat outings. An appropriate response is to charge boaters a fee, based on usage that covers the cost of providing rescue services.
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Because of the number of firms in monopolistic competition,
A) each firm has a large market share. B) it is possible for the firms to collude. C) no one firm can dominate the market. D) one firm has the ability to dictate market conditions. E) each firm must carefully monitor what its competitors do.
Which of the following would be an advantage of the partnership form of business?
a. limited liability b. unlimited liability c. ability to raise money by issuing stock d. ability to bring talents and money together e. all of the profits earned flow to one person