Briefly explain why having a completely clean environment has costs and may not be the best option to pursue.
What will be an ideal response?
In many respects, a clean environment is no different from any other desirable good. In a world of scarcity, we can increase our consumption of a clean environment only by giving up something else. The problem that we face is choosing the combination of goods that does the most to enhance human well-being. Few people would enjoy a perfectly clean environment if they were cold, hungry, and generally destitute. On the other hand, an individual choking to death in smog is hardly to be envied, no matter how great his or her material wealth. Only by considering the additional cost as well as the additional benefit of increased consumption of all goods, including clean air and water, can decisions on the desirable combination of goods to consume be made properly.
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The above figure illustrates the market for electric power that is served by the one utility in Alberta, Canada
a. If the government did not regulate this utility, what would be the price of a kilowatt hour in this region and how much power would be generated? b. If the government regulates the utility and chooses an average cost pricing rule, what would be the price of a kilowatt hour and how much power would be generated? c. If the government regulates the utility and chooses a marginal cost pricing rule, what would be the price of a kilowatt hour and how much power would be generated?
If the marginal propensity to consume (MPC) is 0.9, then the multiplier for a change in autonomous spending will be
A) 0.1. B) 9. C) 10. D) 100.