In the debate over passing a bill providing a minimum guaranteed price for corn, a congressman argued, “Minimum guaranteed prices always cause a disruption of the natural equilibrium of a market, ultimately costing taxpayers money.” Evaluate this
statement.
Please provide the best answer for the statement.
The congressman’s statement is not completely correct. If a price floor is set above the equilibrium price, then the market equilibrium will be disrupted. This disruption will cost consumers money, forcing them to pay higher prices for goods and resulting in a misallocation of resources.
However, should the price floor be set below or at the equilibrium price, the market will be able to reach its natural equilibrium, resources will be properly used and inefficiency will not result. Thus, the congressman is only in part correct.
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According to the Taylor rule, the Fed should raise the federal funds interest rate when inflation ________ the Fed's inflation target or when real GDP ________ the Fed's output target
A) rises above; drops below B) drops below; drops below C) rises above; rises above D) drops below; rises above
When the production possibilities curve is a straight line, the opportunity cost of producing more of one good must be equal to the opportunity costs of producing more of the other good
Indicate whether the statement is true or false
If the demand for a consumer good increases, the demand for resources required to make the good will
a. remain the same, but the quantity demanded will increase. b. decrease if the demand for the consumer good is inelastic, otherwise the demand will increase. c. stay the same, but the quantity demanded will decrease. d. increase.
Producers are willing to offer greater quantities for sale at higher prices because
What will be an ideal response?