When a nuclear-powered electrical plant is permitted to dump radioactive waste at no cost into a recreational waterway lowering the value boaters receive from the waterway, the
a. firm's cost of producing electricity will be higher than the community's true opportunity cost.
b. firm will tend to produce too little electricity from the viewpoint of economic efficiency.
c. community generally receives an external benefit from the production of electricity.
d. firm's cost of producing electricity will be lower than the community's true opportunity cost.
D
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Consider a factory that emits chemicals into a river, thus polluting the water supply of a downstream community. The Coase Theorem states that the socially optimal, or efficient, solution can be achieved by assigning property rights to _____________________.
a. the company. b. the community. c. the company and the community, jointly. d. the company or the community. e. a government regulator.
Refer to the scenario above. The opportunity cost of producing one pound of oranges in Beta is:
A) 1/2 pounds of apples. B) 5 pounds of apples. C) 2 pounds of apples. D) 1 pound of apples.