The presence of pollution in the trucking industry leads in the long run to dynamic inefficiencies because
A) marginal external cost rises over time.
B) marginal external cost is constant over time.
C) average private cost in trucking is lower than average social cost, so that some trucking firms remain in the industry (or are induced to enter) when efficiency calls for them to leave (or stay out).
D) average private cost in trucking is higher than average social cost, so that some firms trucking firms exit the industry when efficiency calls for them to stay (or for more firms to enter).
E) fewer resources are devoted to transportation than the economy really needs.
Question 2
What is one difference between the Cournot and Stackelberg models?
A) In Cournot, both firms make output decisions simultaneously, and in Stackelberg, one firm sets its output level first.
B) In Stackelberg, both firms make output decisions simultaneously, and in Cournot, one firm sets its output level first.
C) In Cournot, a firm has the opportunity to react to its rival.
D) Profits are zero in Cournot and positive in Stackelberg.
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