When a negative externality is present in a market, when a quota is imposed, it is:
A. efficient, because the market consumes the efficient level.
B. efficient, because the net benefit of everyone at the amount set by the quota is equal.
C. not efficient, because individuals' net benefits from the amount set by the quota are different.
D. not efficient, because the marginal cost outweighs the marginal benefit for too many consumers at the amount set by the quota.
Answer: C
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The principle of marginal analysis is useful when trying to:
a. find ways to average costs. b. find ways to further income equality. c. make decisions that maximize net gains. d. make either/or decisions.
A trade policy that protects domestic producers from certain actions taken by foreign governments or firms is
A) illegal under WTO rules. B) called a contingent protection policy. C) considered a beggar-thy-neighbor policy. D) intended to protect domestic consumers.