Suppose, in the United States, each farmer is given a federal agricultural subsidy worth $30,000 . What will be the effect of such subsidy?
a. It discourages domestic agricultural production.
b. It allows U.S. farmers to sell their products for lower prices in foreign markets.
c. It gives foreign producers an unfair cost advantage.
d. It increases the amount of agricultural imports into the United States.
e. It reduces the prices of the primary products in the U.S. market.
b
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What will be an ideal response?
The above figure shows Bob's utility function. He currently has $100 of wealth, but there is a 50% chance that it could all be stolen. Bob is risk averse because
A) his utility function is concave. B) he has diminishing marginal utility of wealth. C) he is willing to pay a premium to avoid a risky situation. D) All of the above.
The marginal propensity to save (MPS) can be found using the equation: (1 - MPC)
Indicate whether the statement is true or false
A steel factory has the right to discharge waste into a river. The waste reduces the number of fish, causing damage for fisheries. Let X denotes the quantity of waste dumped. The marginal damage, denoted MD, is given by the equation MD = 2 + 5Q. The marginal benefit (MB) of dumping waste is given by the equation MB = 34 - 3Q.
(a) Calculate the efficient quantity of waste. (b) What is the efficient fee, in dollars per unit of waste, which would cause the firm to dump only an efficient quantity of waste? (c) What would be the quantity dumped if the firm did not care about the fishery?