In a market economy, household income is determined primarily by
a. the age of the head of household
b. the gender of the head of household
c. luck
d. the productivity of labor resources
e. government transfer payments
D
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Consider a price ceiling imposed on a monopoly that is set below the competitive price. Design a diagram showing the monopoly equilibrium in this case. Use your diagram to show that a price ceiling set this low will create a shortage.
What will be an ideal response?
The figure above shows the market for cotton in Georgestan. The government regulates the market with a production quota set at 8 million pounds per year. The introduction of the quota has
A) not affected the level of cotton production in Georgestan. B) increased the production of cotton in Georgestan by 8 million pounds. C) decreased the production of cotton in Georgestan by 4 million pounds. D) decreased the production of cotton in Georgestan by 8 million pounds.
Which of the following is the most likely explanation for the imposition of a price floor on the market for corn?
a. Policymakers have studied the effects of the price floor carefully, and they recognize that the price floor is advantageous for society as a whole. b. Buyers and sellers of corn have agreed that the price floor is good for both of them and have therefore pressured policy makers into imposing the price floor. c. Buyers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor. d. Sellers of corn, recognizing that the price floor is good for them, have pressured policymakers into imposing the price floor.
Refer to the accompanying figure. The opportunity cost of producing one bushel of wheat is:
A. 500 bushels of corn. B. ½ of a bushel of corn. C. 1,000 bushels of corn. D. 2 bushels of corn.