The Accompanying Tables Show Data for the Hypothetical Nations of Alpha

question 184

Multiple Choice

The accompanying tables show data for the hypothetical nations of Alpha and Beta. Qₛis domestic quantity supplied, and Q_d is domestic quantity demanded. The domestic equilibrium prices of steel in Alpha and Beta are

• A)$5 and $4, respectively.
• B)$2 and $4, respectively.
• C)$3 and $2, respectively.
• D)$1 and $2, respectively.

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Definitions:

Negative Externalities

Costs suffered by a third party as a result of an economic transaction, which are not reflected in the transaction's price.

Taxed

The act of imposing financial charges on individuals or entities by a governmental organization in order to fund public spending.

Coase Theorem

A principle that suggests that if property rights are well-defined and transaction costs are negligible, parties will negotiate to correct externalities without the need for government intervention.

Externality Problems

Issues arising when the actions of individuals or firms have effects on third parties that are not reflected in market prices.