The market mechanism is more efficient in allocating resources between time periods than it is in allocating resources among different industries

According to one study, the price elasticity of demand for cigarettes is 0.25. To decrease the consumption of cigarettes by 8 percent, a tax on cigarettes must raise the price of cigarettes by

A) 32 percent. B) 25 percent. C) 2 percent. D) 3.1 percent.

Which of the following is NOT a reason social returns might be greater than private returns?

A) Excess competition between firms B) Knowledge spillovers C) Spillovers from research and development D) Capital market imperfections