Author Question: Nancy loves to landscape her yard, but her neighbor Tom places a low value on his landscaping. When ... (Read 65 times)

krzymel · **on:** Jun 30, 2018

Nancy loves to landscape her yard, but her neighbor Tom places a low value on his landscaping. When Tom's grass is neglected and gets long, Nancy will mow for Tom. This is an example of:
a. the fallacy of composition.
b. a pollution tax.
c. a private solution to a negative externality problem.
d. how lazy Tom is.

Question 2

Which of the following statements about an increasing-returns-to-scale industry is not true?
a. It will tend to concentrate production in the hands of a very few large firms.
b. Firms in the industry face higher costs per unit of production as their level of output increases.
c. Opportunity costs may fall with the level of output.
d. Proponents of strategic trade policy contend that tariffs can be used to stimulate production by a domestic industry capable of achieving increasing returns to scale.
e. The costs of producing a unit of output fall as more output is produced.