-Refer to the Above Figure

question 177

Multiple Choice

-Refer to the above figure. Suppose the marginal benefit and the marginal cost curves of pollution abatement are normally shaped. Suppose the equilibrium is for a factory in Los Angeles. What would happen if the same factory were in the middle of Nevada?

• A) The marginal cost curve (1) would shift to (2) and there would be no difference in the level of abatement.
• B) The marginal cost curve (2) would shift to the left and there would be less abatement in Nevada.
• C) The marginal benefit curve (4) would shift to the left and there would be less abatement in Nevada.
• D) The marginal benefit curve (2) would shift to the right and there would be more abatement in Nevada.

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Definitions:

Condition Precedent

A condition in a contract that must be met before a party's promise becomes enforceable.

Parol Evidence Rule

A legal principle that prevents parties to a written contract from presenting extrinsic evidence of terms that contradict or modify the written terms of the contract.

Obligor

A person or entity legally bound to provide a benefit or payment to another under the terms of a contract.

Statute of Frauds

A rule of law stipulating that specific kinds of agreements must be documented and signed in order to be legally binding.