Suppose the government has declared beer to be an illegal substance and imposes a fine on anyone caught buying a beer. Selling beer, however, remains legal
Using the above figure, in which CBL is the cost of breaking the law, what is the equilibrium price and quantity with this new law in effect? A) $5 per quart and 300 quarts of beer
B) $3 per quart and 500 quarts of beer
C) $3 per quart and 100 quarts of beer
D) $1 per quart and 300 quarts of beer
D
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According to the fundamental identity of national income accounting, income and output are identical. Why, then, is national income not equal to GDP?
What will be an ideal response?
Answer the following statement(s) true (T) or false (F)
1. The spending needed to maintain the utility level of society to compensate for resources used to achieve a cleaner environment is referred to as explicit environmental costs. 2. Marginal social cost is equivalent to the sum of the market-level marginal abatement costs and the government’s marginal cost of enforcement. 3. Marginal social cost (MSC) of some abatement level, A1, can be determined as the area under the total social cost (TSC) function up to A1. 4. The area under the MSC from the origin up to some abatement level, A0, is the TSC of abating A0 units. 5. The marginal social cost (MSC) curve linked to environmental policy is captured by the supply of the public good, environmental quality.