In your environmental economics study group, a friend argues that using taxes to control pollution is not efficient because, even with taxes, a positive amount of pollution is still produced. Do you agree?
What will be an ideal response?
No, an efficient outcome is not necessarily the one where pollution is completely eliminated. The efficient level of pollution occurs at the point where the marginal benefit from the good that is being produced is equal to the marginal social cost of the good. The marginal social cost includes the costs of pollution.
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Refer to the scenario above. A basket of goods worth $1 in the U.S. has a price of ________ in Country 2
A) 320 ritz B) 50 ritz C) 12.5 ritz D) 25 ritz
"I'm telling you, instead of charging $50 each, they could give the opera tickets away for free, and I myself still wouldn't go—ever!" What can we say about this person's demand for opera tickets?
A) His price elasticity is infinite, which means his demand curve is upward sloping. B) His price elasticity is exactly equal to 1, which means his demand curve is unit elastic. C) His price elasticity is exactly equal to 50, which means his demand curve is very elastic. D) He doesn't have a demand for opera tickets.