Why is deadweight loss less with the deficiency payment program than with surplus purchasing price support programs?
What will be an ideal response?
The deficiency payment program does not create as large of a deadweight loss as the surplus purchasing programs because it does not lead to the production of crops that will not be consumed, or to the storage problems associated with the other price-support programs.
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If Mellon Bank has demand deposits of $6 billion and excess reserves of $50 million, and the reserve requirement is 10%, the bank's actual reserves are
A. $550 million. B. $600 million. C. $650 million. D. $1 billion.
Exhibit 14-7 Aggregate supply and demand curves
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At point A in Exhibit 14-7, the aggregate demand AD2 and the aggregate supply curve reflect an economy in which
A. full employment is at $1,000 billion GDP. B. excess aggregate supply is created when there is a shift from AD1 to AD2. C. excess aggregate demand forces prices up to P = 120. D. excess aggregate demand causes prices to stabilize at P = 110.
Tariffs reallocate income from
A) consumers to producers. B) producers to consumers. C) government to producers. D) consumers to foreigners.
The Cournot model is based on two firms that produce identical products and collude to set prices.
Answer the following statement true (T) or false (F)