In the figure above, S is the supply curve and D is the demand curve in the unregulated, competitive market for gasoline in Motorland. The external cost of gasoline is constant at $1.50 per gallon
The unregulated, competitive market for gasoline in Motorland A) produces the efficient quantity of gasoline.
B) overproduces by 0.2 million gallons of gasoline a month.
C) underproduces by 0.1 million gallons of gasoline a month.
D) overproduces by 0.1 million gallons of gasoline a month.
D
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Suppose consumers save 5 percent of their incomes. If the government collects 100 dollars in taxes from each taxpayer, private saving will ________ per taxpayer
A) decrease by 95 cents B) decrease by $5 C) increase by $105 D) decrease by $95
Trade diversion reduces worldwide efficiency, because:
a. production is diverted to the country with comparative advantage. b. production is diverted away from the country with comparative advantage. c. unnecessary trade restrictions are created in the economies. d. consumption is diverted to the country having inadequate demand. e. the cost of transhipment of the goods increases thus raising their prices in the world market.