Which of the following statements is TRUE about the optimal quantity of pollution?
A) It equals zero.
B) Pollution abatement should continue up to the point where marginal cost equals the average total cost.
C) Trade-offs exist between producing a cleaner environment and producing other goods and services.
D) Firms should be allowed to determine the profit-maximizing amount of pollution abatement.
Answer: C
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A dedicated professor loves being in the classroom and would teach for $50,000 per year, but he is actually paid $60,000 per year. This individual
A) receives economic rent of $1100,000. B) has an opportunity cost of $110,000. C) has an opportunity cost of $50,000. D) receives economic rent of $10,000.
What would be the consequence of a 10 percent decrease in the price of a good for which price elasticity of demand is 5?
a. A 50 percent decrease in the quantity demanded b. A 5 percent increase in the quantity demanded c. A 50 percent increase in the quantity demanded d. A decrease in the quantity demanded by 0.2 units e. An increase in the quantity demanded by 0.2 units