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In the 1970s in U.S. cities, air emissions were governed almost completely by prescriptive regulations. One of the problems faced by regulations in large urban areas with air quality well below desirable levels was how to let new polluters into the city without reducing air pollution. Regulators came up with an innovative approach called the offset system. New sources had to “convince” exiting sources of emission to reduce emissions. The overall effect of all of the reductions had to at least offset the pollution additions by the new sources. Explain why or why not this so-called “offset system” is equivalent to a marketable permit system. (200 words minimum)
What are expectations, and why are they important in macroeconomic models? What would you think about a macroeconomic model that assumed that people’s expectations of inflation were constant, even though the inflation rate changed over time?
In order to show that perfectly competitive markets are efficient, economists assume that such markets are characterized by “perfect information.” How can imperfect information create inefficiency in what would otherwise be a competitive market?
Assuming transaction costs are small, the Coase theorem would predict that private parties could arrive at an efficient solution for which of the following problems?
The quantity theory of money states that the money supply (M), velocity of money (V), price level (P), and real GDP (Y) are related by the equation . According to this equation, if velocity and real GDP are constant and the Federal Reserve decreases ..
Fassbender Widgets, Inc. has opened a new widget factory next to Lake Dunn. In the production of widgets, WWI dumps 5 thousand gallons of a pollutant, red dye #308, into the lake. The pollutant reduces the fish population and results in a loss to tho..
Explain why, even though free trade may be good for the economy, we still have trade barriers (tariffs, quotas, regulations, subsidies, etc.) Relate your answer to the Stolper-Samuelson theory and the concept of “specific factors.”
If the market premium is 11.56 percent, the risk-free rate is 4.06 percent, the inflation rate is 1.46 percent, and Middlefield Motors common stock has a beta of 0.52, then what is the expected return for Middlefield Motors stock? Answer as a rate in..
q1. illustrate trade-off must be considered when deciding explain how much of your wealth is to be held as money
When the economy is in a recession, expansionary fiscal policy can be used to stimulate and encourage economic growth. Which of the following scenarios represent expansionary fiscal policies from both a supply and demand perspective at the same time?
The relationship between the less- developed- countries and the developed countries in the evolution of international trade has always been a bit strained. Discuss this relationship, including policies adopted and /or advocated by each group to "help..
The inverse market demand for fax paper is given by P=400-2Q. There are two firms who produce fax paper. Each firm has a unit cost of production equal to 40, and they compete in the market in quantities. Show how to derive the Cournot-Nash equilibriu..
Suppose that you learn that a friend recently received a substantial inheritance. Your friend was given two choices: 1) wait 10 years and receive the inheritance or 2) receive the present value of the inheritance (using a 3% discount rate) now. Your ..
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