If an economy is producing a level of output that is on its production possibilities curve, the economy
A) has idle resources.
B) has idle resources but is using resources efficiently.
C) has no idle resources but is using them inefficiently.
D) has no idle resources and is using resources efficiently.
Ans: D) has no idle resources and is using resources efficiently.
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A tariff on imported peanuts ________ the quantity of peanuts imported and ________ the domestic price of peanuts
A) decreases; decreases B) decreases; increases C) increases; lowers D) does not change; increases
In the presence of a negative externality, a specific tax can achieve the social optimum because
A) output is reduced to zero as a result. B) it internalizes the external cost. C) it directly charges the producer for polluting. D) the price of the good rises by the full amount of the tax.