Suppose that a mayor of a large city believes strongly that education provides great benefits to the community and urges the state government to provide the district with more money. An economist would say that this reflects the Mayor's belief that:
a. since teachers are overpaid, the district needs more money to hire enough teachers for its classrooms.
b. there are positive external benefits
associated with education.
c. there are nontrivial external costs associated with education.
d. public schools provide a higher quality education than private schools.
b
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What are marketable permits? Suppose there are two firms in an area, each emitting tons of sulfur. The government decides on a target level of 200 tons of sulfur, and gives each firm a permit to emit 100 tons of sulfur
Suppose Firm A is very efficient and can reduce pollution by 100 tons with an abatement cost of $500. Firm B has an older plant, so it will cost Firm B $1,000 to reduce emissions by 100 tons. What will occur with marketable permits?
If the Fed believes the natural rate of unemployment is 5.5 percent and the natural rate is really 5 percent, what is likely to happen in the short run?
a. The Fed will allow unemployment to be unnecessarily high and output to be unnecessarily low. b. The Fed will allow unemployment to be unnecessarily high, but output will remain at potential. c. The Fed will allow unemployment to be unnecessarily low and output to be unnecessarily high. d. The Fed will allow output to be unnecessarily low, but unemployment will remain at the natural rate. e. The Fed will allow unemployment to be unnecessarily low and output to be unnecessarily low.