Refer to Negative Externality. Suppose there are no transactions costs. Also suppose the externality is internalized when the damaged parties offer producers a bribe of $5 per unit to reduce their production. Coase's analysis indicates that social gain in this situation will equal
The following questions refer to the accompanying diagram, which shows the effects of a negative externality created by an industry's production. The equilibrium quantity in the absence of any attempt to internalize the externality is QE, and the optimal quantity according to a Pigovian analysis is QO.
a. area A + B + F.
b. area A + B + F - E.
c. area A + B + C + D + F + G + H.
d. area A + B + C + F + G.
a. area A + B + F.
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An upward sloping short-run aggregate supply curve suggests that
A) prices and wages are completely inflexible. B) prices and wages adjust in part to short-run demand changes. C) prices and wages are completely flexible. D) real GDP is determined by aggregate supply.
The most common estimate of the value of transactions used to estimate velocity is
a. real GDP. b. total sales. c. nominal GDP. d. cash balances.