Suppose the Environmental Protection Agency issues pollution permits in order to limit the quantity of pollution. Under this policy, is the supply of pollution rights perfectly elastic or is it perfectly inelastic?

Which of the following markets is closest to a monopoly?

A) a firm with a 90% market share B) the only gas station for 100 miles C) cable television D) garbage disposal

For this question, assume that taxes are independent of income (i.e., the income tax rate is zero). Now suppose that fiscal policy makers wish to decrease equilibrium output by $500 billion. Further suppose that policy makers can choose one of the following two options: (1 ) change in government spending; or (2 ) change in taxes. Compare and explain the relative size of the changes in government

spending and taxes needed to obtain this desired change in output. What will be an ideal response?