Answer the following statement(s) true (T) or false (F)
1. A Pigouvian tax is a charge on a good whose production generates a negative externality, such that the charge isequal to the MEC at the competitive output level.
2. In the single-polluter case, a firm faced with an emission charge for pollution implemented as a marginal tax (MT) will abate as long as MAC
4. If firms abate to the point where each firm’s MAC equals the marginal tax, an efficient solution will result.
5. Of all the market-based policy instruments used to combat environmental damage, the pollution charge is the most commonly used worldwide.
1. False
2. True
3. True
4. False
5. True
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The price elasticity of demand is important to firms because
a. it explains the relationship between income and demand for the goods they sell b. it shows how price changes affect total expenditures on the goods they sell c. the law of demand suggests that elasticity falls as total expenditures continuously rises d. it helps identify the equilibrium price and quantity in the market e. it relates price to supply
A Lorenz curve that is perfectly straight indicates
A) that society is very rich. B) that a small portion of the population accounts for most of the income. C) that a large portion of the population accounts for most of the income. D) complete income equality.