Economic theory suggests that if natural resources can be held as private property, then
A) conservation will be nonexistent.
B) owners will have an incentive not to abuse them.
C) natural resources will be sold off for immediate use.
D) people will simply hold them and refuse to make them available.
Answer: B
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If a firm finds that, at its current level of employment, VMP > W, it will
A) be maximizing profits. B) be minimizing profits. C) increase the amount of labor it hires. D) decrease the amount of labor it hires.
Suppose a smoker wants to quit smoking. The utility that he gets from smoking a cigarette now is 6 utils but, in the long run, that cigarette will generate undiscounted health problems of 10 utils (e.g., an elevated risk of lung cancer)
Use the concept of discounting to explain why impatient smokers may not quit smoking even though the undiscounted net utility of smoking is negative.