Explain why member firms of a cartel like OPEC have incentives to agree to a low cartel production level and then produce more than its quota
What will be an ideal response?
A low cartel production level results in a high market price for oil. Thereafter, each firm has an incentive to unilaterally cheat on the agreement by producing beyond its quota. Of course, ultimately if everyone cheats then the price of oil will fall, but at least for a while some members will earn higher profits than they would if they had adhered to their quotas.
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________ played a large role is removing lead from the atmosphere in the United States
A) Pigovian taxes B) The Coase Theorem C) Emissions charges D) Marketable permits
Which of the following statements is TRUE?
A) State and local governments cannot default on their bonds. B) Bonds issued by state and local governments are called municipal bonds. C) All government issued bonds—local, state, and federal—are federal income tax exempt. D) The coupon payment on municipal bonds is usually higher than the coupon payment on Treasury bonds.