Two firms, A and B, each currently dump 20 tons of chemicals into the local river. The government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. The government gives each firm 10 pollution permits, which it can either use or sell to the other firm. It costs Firm A $100 for each ton of pollution that it
eliminates before it reaches the river, and it costs Firm B $50 for each ton of pollution that it eliminates before it reaches the river. After the two firms buy or sell pollution permits from each other, we would expect that
a. Firm A will no longer pollute, and Firm B will not reduce its pollution at all.
b. Firm B will no longer pollute, and Firm A will not reduce its pollution at all.
c. Firm A will dump 10 tons of pollution into the river, and Firm B will dump 10 tons of pollution into the river.
d. Firm A will increase its pollution and Firm B will reduce its pollution.
b
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In one hour, George can fix 4 flat tires or type 200 words. His opportunity cost of fixing a flat tire is
a. 200 words b. 4 flat tires c. 1 word d. 50 words e. 800 words
Which of the following about minimum wage is true?
a. Most minimum wage workers are employed more than 40 hours per week. b. Economic analysis indicates an increase in the minimum wage would increase the training opportunities available to inexperienced workers. c. Most minimum wage workers are heads of families with incomes below the poverty level. d. Most minimum wage workers are employed part-time, and they are often members of a household with an income well above the poverty level.