Reference no: EM132231758

Assume a factory is polluting the air in a town. Other than using a tax, the only efficient solution other is to assign property rights (e.g. the right to tax) to a the citizens of the town.___________(True/False)

Let's assume price elasticity of demand for pizza is -3.0, then a 10 percent increase in price results in a decrease of 30% percent decrease in the quantity demanded.___________(True/False)

If pollution creates a negative externality, social welfare is maximized when all the pollution is eliminated.___________(True/False)

Let's assume the professor guarantees that no one would fail the course if they didn't hand in the exam. The policy would likely lead to what kind of problem?

a. Adverse selection

b. Moral Hazard

c. Information asymmetry

d. None of the above