If X transferable emissions permits are issued and there are n potential polluters,
A) the government must initially assign each of the potential polluters X/n permits.
B) the government must assign X/n permits to each potential polluter and check periodically that those permits have not moved.
C) emissions will be the same whether or not the permits are split equally, so long as none of the permits are issued outside the group.
D) emissions will be the same no matter who receives them first, so long as the recipient is willing and able to participate in the permit market.
E) emissions will be less if the permits are given initially to firms with lower abatement costs.
D
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Suppose a competitive firm is paying a wage of $12 an hour. Assume that labor is the only input. If hiring another worker would increase output by four units per hour, then to maximize profits the firm should
A) layoff some workers. B) not change the number of workers it currently hires. C) hire the extra worker. D) There is not enough information to answer the question.
When a person wants to buy a used car, asymmetric information may land her with a “lemon” because:
a. neither she nor the dealer can know everything about the car. b. a used car is in a lower-risk category for insurance purposes. c. a used car that has been in an undisclosed accident could have alignment problems. d. the car dealer knows more about the car than she does.