Economists would describe cartels as
a. the opposite of ignoring interdependence.
b. a collusive arrangement.
c. an undesirable form of market organization that may charge a monopoly price.
d. All of the above are correct.
d
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The practice of approving mortgages in order to sell them as mortgage-backed securities is known as ________
A) originate-to-distribute B) principal-agent engineering C) predatory lending D) a credit default swap
Refer to A Negative Externality Problem. Suppose there are no transactions costs. Also suppose the externality is internalized when the damaged parties offer producers a bribe of $10 per unit to reduce their production. Coasian analysis indicates that social gain in this situation will equal
Demand for a good is given by Q = 100 - P. The private marginal cost of production is MCP = 10 + Q. There is a $10 per unit negative production externality in this situation. a. $0 b. $800 c. $1,600 d. $3,200