Country X imports rice from the world market. Which of the following policy instruments, if adopted by its government, may result in a switch from rice being imported to being exported?
A. Division of land holdings
B. An agricultural price support that includes the government selling any excess production to foreign buyers
C. Taxing imports of agricultural inputs
D. An agricultural price ceiling that creates domestic excess demand
Answer: B
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In the presence of compensating wage differentials, explain why the consumption possibility frontier is not a good approximation of the utility possibility frontier.
What will be an ideal response?
The price elasticity of demand shows
A) the relationship between market price and household income. B) the proportionate amount by which the quantity demanded changes in response to a proportionate change in price. C) the quantity demanded at a given price. D) the proportionate amount by which the price changes in response to a proportionate change in quantity demanded.
Refer to Scenario 9.1. The socially optimal outcome occurs when Sheb places ________ sheep on the commons and Monty places ________ sheep on the commons
A) 4; 4 B) 4; 5 C) 5; 4 D) 5; 5
A product's price elasticity of demand is likely to be greater
A) if it only has a few substitutes. B) if consumers spend a small proportion of income on the product. C) the less time consumers have to adjust to price changes. D) if the product is a luxury good rather than a necessity. E) Both answers C and D are correct.