A negative externality is said to exist if
A. the social costs exceed the private costs.
B. the private marginal cost exceeds the private marginal benefit.
C. the producer and the consumer surplus for a particular good are not equal.
D. a tax imposed on the production of a particular good results in a deadweight loss.
Answer: A
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Which theory emphasizes the significance of new discoveries that can be used by many people at the same time?
A) neoclassical growth theory B) new growth theory C) classical growth theory D) None of the above answers are correct.
Over twenty years ago the city of Washington D.C. was facing a budgetary shortfall. In a plan to increase tax revenue the mayor and city council agreed to raise the excise tax on gasoline
Typically for goods like gasoline which are price inelastic this should have led to an increase in tax revenue. However, just the opposite happened – tax revenue plummeted! What could explain this seemingly paradoxical result?