Your starting salary is $35,000 per year. After one year, you are given a raise that increases your nominal salary. Which of the following salaries would you prefer the most?

Explain the argument for why taxing externalities is an economically legitimate distortion

What will be an ideal response?

Table 1.2 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus. Complete the table by calculating the required opportunity costs for both the B-1 and Stealth bombers.  Table 1.2Production Possibilities for BombersCombinationNumber of B-1 BombersOpportunity cost(Foregone Stealth)Number of Stealth BombersOpportunity cost (Foregone B-1)A20NA195 B35 180 C45 150 D50 100NAThe highest opportunity cost in Table 1.2 for B-1 bombers in terms of Stealth bombers is

A. 10 Stealth bomber per B-1 B. 10 Stealth bombers per B-1 C. 10 B-1 bombers D. 33 B-1 bombers