Which of the following statements is correct? Select one: a. the use of tradeable permits and corrective taxes reduces the cost of environmental protection b. rich countries usually have cleaner environments than poor countries because a clean environment is like other normal goods in that it has a positive income elasticity c. clean water and clean air are goods to which the law of demand applies d. all of the above are correc

the need for oil, an input into gasoline, increased one year because of a severe winter. Many homes in the northeast heat their homes with oil. 2. Why would supply and demand theory suggest that price controls (to deal with the situation described in the previous question) have negative consequences? They are politically unpopular. They cause shortages of gasoline. They shift the demand for gasoline to the right because of a change in tastes. Both b) and c) are correct. а. b. С. d.

Explain what the rationing problem is, and one strategy for dealing with it.

B. Let’s consider the market for flour in a different town. Assume that it is efficient (i.e. that there are not external costs to producing flour, and no external benefits from consuming it). Price ($/lb) Quantity Supplied (thousands of lbs per day) Quantity Demanded (thousands of lbs per day) 1.5 8 14 2 9 13 2.5 10 12 3 11 11 3.5 12 10 4 13 9 What is the price and quantity of flour sold without government intervention. Graph this equilibrium. XXXX   2. Suppose that, alarmed by the inability of many poorer consumers to buy flour, the government institutes a $2/lb price ceiling. How much flour will suppliers wish to sell, and how much will buyers demand?  How much flour will actually be sold? Show this outcome on the same graph you drew for question 1. XXXX 3. Describe, in one sentence each, three problems that this policy might create? Please do not simply copy down phrases from the textbook, but instead describe ways that…