When Pigouvian subsidy is imposed on a market with a positive externality, total surplus:
A. increases more than the increase in consumer surplus.
B. decreases less than the increase in consumer surplus.
C. decreases more than the decrease to producer surplus.
D. increases less than the decrease to producer surplus.
Answer: A
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a. terminated after one year. b. for new firms that eventually would develop significant economies of scale in their production processes c. restricted to firms that face little competition d. based on current absolute advantage e. permanent
A buyer is willing to buy a product at a price greater than or equal to his willingness to pay, but would refuse to buy a product at a price less than his willingness to pay
a. True b. False Indicate whether the statement is true or false