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Unformatted text preview: C) Yes
4. An individual is more likely to free ride when a good is:
A) artificially scarce. excludable and nonrival
excludable and rival
D) nonrival. rival- more than one person cannot consume the good at the same
excludable- suppliers of the good can stop people who dont pay
from using the good
nonrival- more than one person can consume it
nonexcludable- suppliers of the good cannot stop people who dont
pay from using the good
Version 1 Page 1 Use the following to answer question 5:
Figure: Three Firms the tax is $400 the point where the MB line meets the tax line is
how much the firm will produce! Firm C will not produce
because they are under the tax line meaning it more expensive
for firm to pollute and pay the tax than to not pollute. the marginal cost of production was at 0 (the x axis)
and a tax is a parallel (vertical) increase at the amount
of the tax
5. (Figure: Three Firms) Three firms in a small city are responsible for emitting pollution,
and the marginal benefit of the individual polluters is shown in the f...
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This document was uploaded on 02/18/2014 for the course ECON 2010 at Colorado.
- Fall '07