A person removes the anti-pollution devices on his automobile. An external cost associated with this is
A) the feeling of guilt the person feels for violating the law.
B) the ticket he gets when a highway patrol officer pulls him over.
C) the man's neighbor washes his car more often because of increasing smog.
D) the man buys less gasoline, reducing the income of local gas stations.
C
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Refer to Figure 4.2. A Nash equilibrium exists
A) only where all three players go to the movie theater. B) only where all three players go to the bowling alley. C) where all three players go to the movie theater and where all three players go to the bowling alley. D) These is no Nash equilibrium in this game.
Which of the following correctly describes incentives?
A) Incentives refer to the maximum price that a buyer is willing to pay for a good. B) Incentives are rewards or penalties that motivate people to behave in a particular way. C) Incentives are prices that are fixed by the government and not by market forces. D) Incentives refer to the minimum price at which a seller is willing to sell a product.