What supply and what demand approaches have been used to reduce surpluses of farm commodities?
What will be an ideal response?
On the supply side, one policy has been an acreage allotment program that sets aside land from production. In this program, farmers agree to limit planting in exchange for the supported prices. These programs only partially work because farmers set aside their worst land and keep their best land in production, so there is not a proportionate decrease in supply from the amount of land “retired.” On the demand side, new uses for agricultural products have increased the demand for them through such practices as the production of gasohol. Demand has also been bolstered by increasing domestic and foreign demand through programs like food stamps for low-income families and the Food for Peace program that enable less developed countries to buy surplus farm products from the U.S.
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What are the strengths and weaknesses of the negative income tax (NIT) as an alternative to traditional welfare programs?
What will be an ideal response?
The above figure shows a competitive firm's demand for labor assuming that the firm's output sells for $1 per unit. If the wage is $5 per hour, a ten cent per unit subsidy on the good sold by the firm will cause the firm to
A) demand less labor. B) demand more labor. C) raise the wage for workers to $5.10. D) None of the above.
Demand curves are negatively sloped when people buy:
a. less as the price decreases. b. more as the price increases. c. the same amount as the price changes. d. more as the price decreases. e. less as incomes decrease.
Disposable income
A. decreases when saving increases. B. increases when net taxes increase. C. increases when income increases. D. increases when saving decreases.