Assume that U.S. agricultural land is used either to raise cotton for clothing or to grow wheat. Agricultural researchers develop a new wheat hybrid that is more resistant to drought and insects. What effect will this have on the production possibilities frontier for cotton and wheat?
a. maximum possible production of both cotton and wheat will rise
b. maximum possible production of cotton will rise; maximum possible production of wheat will not change
c. maximum possible production of wheat will rise; maximum possible production of cotton will not change
d. maximum possible production of cotton will rise; maximum possible production of wheat will fall
e. maximum possible production of wheat will rise; maximum possible production of cotton will fall
C
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Which of the following statements is true?
A) A rational consumer makes his decisions depending on what the majority chooses. B) A trade-off refers to the exchange of goods between economic agents through a barter system or mutual exchange. C) A budget constraint is an economic tool that quantifies the trade-off between consumption of two goods. D) All rational economic agents attempt to maximize their income.
Social Security is a pure transfer program because
A) it transfers funds from current workers to the poor. B) the government transfers funds from middle-income workers to welfare recipients. C) current payroll taxes are used to pay the eligible retirees. D) the government subsidizes the medical bill of the poor.
If marginal costs increase, a monopolist will:
a. decrease price and increase output. b. decrease both price and output. c. increase price and decrease output. d. increase both price and output. e. keep both price and output at the same level.
Oligopoly is characterized by
A. some industries producing differentiated products. B. some industries producing identical products. C. few firms. D. all of the choices.