All of the following result from price floors in agriculture EXCEPT
A. lower prices to consumers for agricultural products that have price floors.
B. higher prices to consumers for agricultural products that have price floors.
C. surpluses of agricultural products that have price floors.
D. governmental bureaucracy.
Answer: A
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The theory of purchasing power parity
A) extends the law of one price to a group of goods. B) assumes that most changes in nominal exchange rates are the result of changes in real exchange rates. C) assumes that inflation rates are roughly the same in most countries. D) was valid only under the gold standard.
At the point at which P=MC, suppose that a perfectly competitive firm's MC = $100, its AVC = $80 and its AC = $110. This firm should
A) shut down immediately. B) continue operating in the short run. C) try to take advantage of economies of scale. D) try to increase its advertising and promotion.
How does moral hazard matter in the market for insurance?