An emissions tax equal to the marginal social cost of pollution at ___________ induces those believed to be polluting to internalize the externality and leads to the socially optimal quantity of pollution.

Which of the following best describes aggregate expenditure?

a. C + I + G + (X ? M) b. C + S + G + (X ? M) c. C + I + G + (X + M) d. C + I + T + (X ? M) e. C + I + T + (X + M)

William quits his job where he earns an annual salary of $75,000 and opens a management consulting business, charging an hourly rate of $120 . He works out of his home, converting a storeroom into an office. (Zoning restrictions prevent William from renting out the room.) Start-up costs are financed by selling $15,000 worth of bonds he inherited that were earning annual interest payments of $900

. During his first year, William incurs expenses for supplies and utilities that total $3,500 . If William bills 500 hours of consulting time in the first year, he earns an economic profit equal to a. $55,600 b. -$15,000 c. -$19,400 d. -$34,400 e. $41,500