A government passes a new law allowing only 1,000 tons of pollution per day to be generated and simultaneously sells 1,000 transferable rights to emit one ton each of pollution per day. Which of the following is true?
A. The pollution will be created by those least willing and able to pay the damages.
B. The pollution will be created by those most willing and able to pay for the right to pollute.
C. The funds collected by the government will be enough to compensate any individuals harmed by the pollution.
D. Pollution will increase from zero to 1,000 units per day.
Answer: B
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Assume that Economy A and Economy B have the same resources, but that individuals in Economy A have specialized whereas individuals in Economy B have not. Given this information, you can determine that
A) Economy A will have a higher output than Economy B. B) Economy A will have a lower output than Economy B. C) Economy A and Economy B will have identical outputs. D) individuals in Economy A will have lower incomes than individuals in Economy B.
A firm encountering economies of scale over some range of output will have a
A. constant long-run average cost curve. B. falling long-run average total cost curve. C. rising, then falling, then rising long-run average total cost curve. D. rising long-run average total cost curve.