Consider the production of some industrial good that involves air pollution. The table below gives the marginal social cost (MSC), the marginal cost (MC), and the marginal social benefit (MSB) for each level of output (Q)
Q MSC MC MSB
1 3 2 11
2 6 4 10
3 9 6 9
4 12 8 8
5 15 10 7
6 18 12 6
To arrive at the efficient market equilibrium the government could impose a tax of
A) $3.
B) $4.
C) $8.
D) $9.
A
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Answer the following statement(s) true (T) or false (F)
1. A negligence standard, with the allowance of contributory negligence, always leads to a socially optimal outcome. 2. Strict liability is the liability that exists when it can be proven beyond a reasonable doubt that the defendant was negligent. 3. Negligence is irrelevant when a strict liability standard is applied. 4. The principle of general average gives a ship's captain an incentive to consider the value of cargo when jettisoning it to prevent a disaster. 5. The doctrine of Respondent Superior contends that an employer is sheltered from torts committed against his employees.
A genuine progress indicator (GPI) attempts to:
A. adjust GDP so that it reflects more than just the level of economic activity. B. develop a new measure that focuses entirely on noneconomic activity. C. adjust GDP so that it more accurately measures changes in economic activity. D. not incorporate any measure of economic activity.