Governments may attempt to protect dairy farmers from low milk prices by:
A. reducing subsidies on the price of milk.
B. increasing taxes on dairy farmers.
C. setting a minimum price on milk.
D. banning the hoarding of milk by households.
Answer: C
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Adverse selection in insurance requires that
a. all people face the same risk b. potential customers facing more risk are no more interested in purchasing insurance c. people are risk averse d. insurers can tell higher risk people from lower risk people
Empirical estimates indicate that the annual welfare cost of monopoly in the United States
a. ranges from less than 1 percent to 5 percent of national income b. ranges from 10 percent to 20 percent of national income c. is approximately 10 percent of national income d. is approximately $1 billion e. is approximately $1 trillion
Pure monopoly markets are very common in the real world
a. True b. False Indicate whether the statement is true or false
If the economy dips into a recession
A. automatic stabilizers will cause tax receipts to fall and transfer payments to rise. B. automatic stabilizers will cause tax receipts to rise and transfer payments to fall. C. discretionary fiscal policy will generate increased transfer payments and lower tax receipts. D. discretionary fiscal policy will reduce government outlays and increase tax receipts.