A business can be operated profitably at a loss for an indefinite period of time
A) if it is unable to meet all their obligations but able to cover operating costs.
B) if we neglect the social costs of discriminatory pricing.
C) for firms that enjoy special legal privileges.
D) if costs are calculated as marginal opportunity costs.
A
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Assume that production from an electric utility caused acid rain and that the government imposed a tax on the utility equal to the cost of the acid rain. This is an example of
A) a Pigovian tax. B) the Coase Theorem. C) a transactions cost. D) a Pigovian subsidy.
When the Fed buys U.S. government securities, the money supply
A) increases because there is an increase in transaction deposits at the bank of the bond dealer but there is no decrease in transaction deposits at any other bank. B) decreases because there is an increase in the reserves of the bond dealer's bank. C) remains unchanged because the increase in transaction deposits at the bond dealer's bank is offset by a reduction in transaction deposits at the Fed. D) remains unchanged because the increase in transaction deposits at the bond dealer's bank is offset by a fall in transaction deposits at another bank.