Homework Answers
(1) (D)
US government attempts to limit pollution by imposing Pigouvian tax, issuing tradeable permits and anti-pollution regulations.
(2) (D)
In perfect competition, farm price is market price, so when market demand increases, demand curve shifts rightward, increasing market price. So farm price increases.
(3) (C)
Cartels occur in oligopoly market. OPEC is example of an oil cartel.
(4) (B)
Profit = Q x (P - ATC), so if P > ATC, Profit > 0.
(5) (B)
A public good is both non-rival and non-excludable.
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