The major difference between tariffs and import quotas is that ()
A. tariffs create deadweight losses, but import quotas do not.
B. tariffs help domestic consumers, and import quotas help domestic producers.
C. tariffs raise revenue for the government, but import quotas create a surplus for import license holders.
D. All of the above are correct.
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Suppose that a steel factory emits a certain amount of air pollution, which constitutes a negative externality. The social cost of producing the steel includes the ()
A. private costs of the steel producers and the price consumers pay for the steel.
B. private costs of the steel producers and the costs to the bystanders affected by the pollution.
C. costs to the bystanders effected by the pollution only.
D. price consumers pay for the steel.
Which of the following statements is most correct about a market which is characterized by a negative production externality? ()
A. The equilibrium quantity of output is equal to the socially optimal quantity.
B. The equilibrium quantity of output is greater than the socially optimal quantity.
C. Government intervention is not required to achieve a socially optimal quantity of output.
D. The cost to the producer exceeds the cost to society.
A market that experiences a positive externality will also experience a ()
A. smaller market output and a higher market price than is optimal.
B. greater market output and lower market price than is optimal.
C. greater market output and higher market price than is optimal.
D. smaller market output and lower market price than is optimal.
According to the Coase theorem, private markets will solve externality problems and allocate resources efficiently as long as ()
A. private parties can bargain without cost.
B. government assigns property rights to the harmed party.
C. the externalities that are present are positive and not negative.
D. businesses determine an appropriate level of production.
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