Author Question: When external costs are present and government imposes a tax equal to the external marginal cost, ... (Read 76 times)

JMatthes

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When external costs are present and government imposes a tax equal to the external marginal cost, then efficiency can be achieved.
 
  Indicate whether the statement is true or false

Question 2

Explain what a black market is and how it functions. What is a black market generally a response to?
 
  What will be an ideal response?



asware1

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Answer to Question 1

TRUE

Answer to Question 2

It is a market in which illegal trading takes place at market-determined prices. It's usually the result of the government imposing a price ceiling which results in a shortage of that particular product. The black market is a way for consumers and firms to get around the restriction.



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