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Unformatted text preview: igure. If the city
imposes a tax of $400 per ton of pollution, Firm B will produce ________ while Firm A
will produce ________ of mercury and Firm C will produce ________
A) 600 tons; 400 tons; 900 tons
B) 300 tons; 500 tons; zero tons
6. A move to Commerce City from Boulder would make you worse off. Your WTA the
move is bounded from above by your income/wealth.
WTA- bounded by preferences in your
brain WTP- bounded by income
7. Let d denote Diet Cokes and c chocolate bars. At my current consumption level my
MRSdc=3. So, my wtp for an additional Diet Coke is 3 chocolate bars.
8. Marginal social cost of an action is the cost of the action that the producer of the action
Space in between
does not pay
is the externality
B) False Version 1 Page 2 9. In a society that consists of one individual, which statement best describes the allocation
of resources that is socially optimal
A) The allocation is efficient
socially optimal= equilibrium and definition of equilibrium
B) It is an equilibrium
C) The individual is doing well
is answer D
D) The individual is doing the best they can given their constraints
because he is doing the best he can given his constraints it implies the market is in equilibrium
and the allocation of resources is efficient...
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- Fall '07