If a firm that emits a form of pollution is also a monopolist, is the firm more likely to be allocatively efficient? Explain
Yes. A monopolist maximizes profit by reducing output and raising price and produces too little output to be allocatively efficient. A polluting firm does not pay the full social cost of production and produces too much output. It is likely that the firm will be nearer to an allocatively efficient output volume.
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If the aggregate demand curve and the aggregate supply curve intersect at a level of real GDP more than potential GDP, there is
A) a below-full employment equilibrium. B) a rising real GDP. C) a falling price level. D) an inflationary ga
An efficiency wage premium serves the same function as a bond because, just as with a bond, the premium represents
A) the amount the employee loses if caught shirking. B) the expected value of the amount the employee loses if he shirks. C) the cost of monitoring the employee. D) the gain to the employee if he shirks.