When a forest is logged, it is possible for the logging to create "soil runoff," a situation in which the soil, no longer protected by trees, erodes and silts a river miles downstream from the logging area
Is soil runoff created by logging in Montana that ruins a river an example of a private cost to the lumbering company or an external cost?
The soil runoff is an external cost. The lumber company does not pay the cost of the ruined river, so the cost is not a private cost to the company. Instead, the cost is borne by fishermen or other users of the river who can no longer use the river, or by society, which pays to clean up the river so that the fishermen and other users can utilize it once again.
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A group price discriminator sells its product in Florida for three times the price it sets in New York. Assuming the firm faces the same constant marginal cost in each market and the price elasticity of demand in New York is -2.0, the demand in Florida
A) has an elasticity of -6.0. B) is more price elastic than the demand in New York. C) has an elasticity of -1.2. D) has an elasticity of -0.67.
Like a perfect competitor, a monopolistic competitor:
a. produces where price equals marginal cost. b. produces a homogeneous product. c. earns zero economic profit in the long run. d. earns zero economic profit in the short run.