Assuming the demand for their products is inelastic, farmers (as a group) have an incentive to
A) increase the supply of what they sell.
B) agree among themselves to decrease the supply of what they sell.
C) spend at least 10 percent of their budgets to advertise their products.
D) b and c
E) a and c
B
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A quota will reduce consumer welfare when
A) the quota is less than the amount purchased without the quota. B) the quota is greater than the amount purchased without the quota. C) the quota is on a good with high income elasticity. D) Quotas always reduce consumer welfare.
Interest earned on funds compounds because in future years, interest is earned on ________.
A) the principal and interest received in previous years only B) interest received in previous years only C) principal only D) future values
What are the major problems that will tend to arise if there are legal limits on the movement of prices?
a. favoritism and corruption of officials and market participants b. unenforceability of laws and higher costs of transactions c. increasing restrictions to enforce the laws d. misallocation of resources as prices no longer correspond to costs e. All of the above are correct.
When a government program is justified not on its merits but on the number of jobs it will create,
a. the program is an efficient use of taxpayer dollars. b. it should be approved only if the unemployment rate is low. c. taxes should be raised to fund the program. d. it is known as the "broken window fallacy.".